Management Accounting Report: Strategies for Tech (UK) Business Growth

This report delves into the application of management accounting principles within Tech (UK). It begins with an introduction to management accounting, differentiating it from financial accounting and highlighting its significance as a decision-making tool. The report then explores various cost accounting systems, including actual, normal, and standard costing, along with inventory and job costing systems. A key focus is on presenting financial information through reports such as job cost, inventory, and budget reports. The report further analyzes the calculation of net profit using both marginal and absorption costing methods. The report also covers budgeting, its different types, and its importance for planning and control. Lastly, it examines the balance scorecard approach for responding to financial problems. The analysis emphasizes the use of management accounting tools and techniques to enhance business operations, maximize profitability, and achieve strategic goals.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A). Meaning of the management accounting and its types:........................................................1
B). Presenting financial information: .........................................................................................4
TASK 2............................................................................................................................................5
A & B). Calculate the net profit under the marginal and absorption costing:............................5
M2...............................................................................................................................................8
D2................................................................................................................................................8
TASK 3............................................................................................................................................8
A). Budget and its types..............................................................................................................8
B). Different types of costing systems which are used for preparation of budgets:.................10
C). The importance of budget as tool for planning and control purposes:................................11
M3.............................................................................................................................................11
D3..............................................................................................................................................11
TASK 4..........................................................................................................................................11
Balance Score card approach for responding financial problems and compare:......................11
M4.............................................................................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is the main process which can be used by the organisation in
order to gain the sustainable development in an effective manner. there are so many tools which
can be used by the organisation in order gain the sustainable development effectively. Although,
this can be rightly said that the management accountant uses various kinds of accounting systems
which can further used by the Tech (UK) organisation for attaining their business objectives in
an effective manner. Net profit by using costing method such as net absorption costing and
marginal costing method. On the other hand, this is rightly said that the management accountant
need to explain their business objectives in an effective manner. Various planning tools for
budgetary tools. Financial tools are used by tech UK in order to overcome the financial problems
in an effective strategy in an effective manner (Vinayagamoorthi and et. al., 2012). Tech (UK)
company would gain an effective and efficient information that could lead to make sustainability
in an effective manner. However, management accountant would use various tools that can be
used by the organisation in an effective manner.
TASK 1
A). Meaning of the management accounting and its types:
Management Accounting reflects of accounting information of an organisation in this
way assist the management for formulating the policy and regular work of the organisation in an
effective way. This has been concerned that the accounting information which is formulating to
the management of the cited organisation. This is rightly said that the accounting information
which is crucial to the management of the cited organisation. It is concerned with the accounting
information that is essential to the management of the company (Macinati and Anessi-Pessina,
2014). It means that all the accounting information are not presented to management but only
that information is collected, analysed and interpreted which is useful in operating the business.
1. Financial accounting vs. Management accounting
Basis of difference Financial Accounting Management Accounting
Purpose Financial accounting purpose
is to communicate the
financial position of the
company to external.
Management accounting
purpose for decision making
for the internal so that the
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financial position is become
strong.
Requirement Mandatory Optional
Primary audience In financial accounting the
users are the external who
uses the financial information
to take the decision on the
investment in the company.
Management accounting the
users are the internal who
makes the decisions, policies,
etc. and uses in internally to
achieve the targets.
Frequency Financial statements in the
financial accounting are
prepared at the end of the
month.
Management accounting the
statements are prepared at
regular intervals.
Focus Financial accounting focuses
on the past data.
Management accounting
focuses on the information to
aid decisions for the future
achievements.
2.Importance of management accounting information as a decision making tool:
The present rigid industrial world, the management accounting has become an essential
part of management. The management accountant guides and advises to the management at
every step. Management accounting not only improves the efficiency of the management but also
maximize the efficiency of the workers of the company.
1. It determines the aim for the company and also tries to find out the route through which it can
reach to the goal.
2. Helps in the preparation of plans to the departments so that these plans satisfy the needs of
the consumers. Before taking any plan the manager must study and investigate the present
and future scenario for the business (Amoako, 2013).
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3. Provides better services to customers by providing quality product and services to them. The
customers are supplied goods and goods quality at affordable price.
4. Maximum profits can be obtained by using the management accounting system. In this
process every possible effort is made to make control on the unnecessary expenses.
3. Cost accounting system: (ACTUAL, NORMAL an d Standard Costing):
This system gives useful information about the management and financial accounting to
the manager of the company. The cost accounting system helps out the managers to find out the
cost of the units which they are produced in the manufacturing process (Management
Accounting, 2017). This system controls the operation expenses and helps to generate the
operational profits for the business concern. This system helps the manager to take the decisions
regarding the cost for the future product which they want to produce.
By using the actual, normal, and standard costing in the product costing are:
ACTUAL COSTING NORMAL COSTING STANADRD COSTING
1. The cost of the
product is
determined by the
actual direct
material, direct
labor, and
employed
overhead by using
the actual overhead
rates.
2. The cost of product
is determined by
the actual direct
material, direct
labor, and
employed overhead
by using the
predetermined
overhead rates.
3. The cost of the
product is
determined by the
standard direct
material, direct
labor, and
employed overhead
by using the
predetermined
overhead rates.
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Actual variable
indirect rates x
Actual quantity of
cost- allocation
bases used
Budgeted variable indirect
rates x Actual quantity of
cost allocation bases used
Standard variable indirect
rates x Standard quantity
of cost allocation bases
allowed for output for
actual output achieved.
4. Inventory Management System: The inventory management systems keep track the resources
which is used in the manufacturing the product in the business activities. This system
monitoring the stock levels, orders, deliveries and sales of the product. TECH (UK) LTD.
integrated with this system to smooth functioning of their stock in whole system. This system
shows the over stock and under stock to the manager of the company so that deficiency or
outdated stock problem does not arise in the production process.
5. Job costing systems: A job costing system provides the information relating to the job
which is gathers from the various useful sources within the organization. This
information used by the customer to make the order to the company regarding the
particular product which they want to manufactured. In this information the price,
quantity and material are used is the previous particular job is shown to the customer so
that they accordingly tailored the product and price of the job (Lim, 2011). This system
used by the cited company to keep monitoring on the identical or specific job order and
related expenses.
B). Presenting financial information:
The various different types of reports which helps the management of the company by providing
them the essential and useful financial information to them which is described below:
1. Job cost report: This report shows the various list to the management regarding the each
specific job to the user of this report. In this report all the previous and present
transactions are recorded in most effective manner so that the management tracks
unnecessary costs and reduce on the spot.
2. Inventory report: In this statement the items relating goods produced and other raw
materials are track down in this report. A quality inventory or stock should be precise in
clear and simple. By utilizing this report, the management rectifies the flow of inventory
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in the whole system of the company. The monitor and eliminate the unnecessary
wastages in the storehouse of the company.
3. Budget report: It is utilized inside the company by the management to do comparison in
between the estimated and actual performance by the various divisions or departments
and note down in the budget report for future use. The report shows the entire past budget
in which all the success and failure are prescribed in the appropriate manner.
4. Importance of using above accounting reports systems:
By utilizing the above reporting system in the company makes the business
operations flows effectively and efficiently. These reports contain all the useful
information which the manager wants to make the effectively useful strategies for the
company. All the reports have their own advantage and they give appropriate information
to the user of the report. All the failure and success of the business operations are
recorded in this report.
M1:
By applying the management accounting system tools and techniques helps TECH (UK)
LTD. to run their business functions effectively and efficiently together achieving the goals and
objectives. Management accounting system gives an idea and useful methods to make the
strategies and objectives to the company (van Helden and Uddin, 2016). Under this, management
of the company uses the Job, inventory and costing system to generate the more profits, reduce
the unwanted cost and avoid the unnecessary wastages in whole management system of the
company.
D1:
The management accounting system assists TECH (UK) LTD. to prepare the useful and
informational full management accounting reports for them in order to make success of the
business operations. With this reporting the manager of TECH (UK) LTD. makes decisions so
that they could achieve predefined objectives. This is the most appropriate procedure used by the
company for the level functioning in the business operations. Hence, both the management
accounting reporting and system is necessary or important to integrate with each other so that the
company attain their pre- set objectives and goals.
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TASK 2
A & B). Calculate the net profit under the marginal and absorption costing:
Income statement on the basis of Marginal costing method:
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Working 1: Calculate variable production cost £
Direct material cost 8
Direct labour cost 5
Variable production Overhead 2
Variable production cost 15
Working 2: Calculate value of inventory and production
Opening inventory Production Closing
inventory
Nil 2000*15 = 30000 500*15 =

Income statement on the basis of Marginal costing method:
Income statement on the basis of Absorption costing method:
Selling Price per unit ￡35
Unit costs
Direct materials cost ￡8
Direct Labour cost ￡5
Variable manufacturing overhead ￡2
Total variable production cost ￡15
Fixed production overhead
Fixed production overhead incurred actually
Fixed selling & distribution expenses
Variable selling & distribution expenses
Sales
￡ 5
￡15,000
￡10,000
15% of sales value
2,000 units
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Net profit using marginal costing ￡Amount £ Amount
Sales value
Less: Variable costs
Stock at the beginning
Cost of production
Stock at the closing
Variable sales overheads
Contribution
Less: Fixed costs:
Fixed Production overheads
Fixed Selling overheads
NIL
30000
(7500)
15000
10000
52500
22500
(7875)
22125
(25000)
Net loss -2875

Absorption costing working notes
Working Note 1: Calculate full production cost
Direct material ￡8
Direct labour ￡5
Variable cost ￡2
Fixed cost ￡5
Total ￡20
Working Note 2: calculate value of inventory and production
Opening inventory Production Closing inventory
0 2,000*20 = £40,000 500*20 = £10,000
Working Note 3: under/ over absorbed fixed production overhead
Actual fixed production: ￡15000
Fixed overhead: ￡10000
Total £ 5000 (under absorbed)
Net profit using absorption costing Amount ￡ Amount ￡
Sales value
Less: Cost of Sales:
Opening stock
Cost of production
Closing stock
(Under)/Over absorbed fixed production overhead
Gross Profit
Less: Selling Expenses
Variable sales expenditure
Fixed selling expenditure
NIL
40000
(10000)
7875
10000
52500
(30000)
(5000)
17500
17875
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Net loss -375
M2
In the above case, the company is applied the important management accounting tools and
techniques to maximize the profitability of the business operation which they are conducted. This
technique helps the TECH (UK) LTD. to full concentrate on their business and makes the
effective strategies for the upcoming projects. By using above two methods of the cost
management system, the company increases their profits and product sales in the market. These
techniques of management accounting assist all departments to prepare the effective goals and
targets for the company and for them.
D2
By using the cost management method in the company, the net profits which are arise in
different way because both the methods have different procedure to give the profits outcome to
the company. In the marginal costing method, the company faces the loss of (£) 2,875 and in the
absorption costing the loss of (£) 375 is faced by the business. So, it is beneficial to the company
to adopt the method of absorption costing because the loss is less than the marginal costing.
TASK 3
A). Budget and its types
Budget is the important source of planning which assist the company to maintain the
financial position in the market (Gates, Nicolas and Walker, 2012). It includes the preparing and
applying the budgets so that the company utilized its resources in the proper way so that they
achieved their targets on the predefined time. The budget reflects the estimated amounts which
are just opposite to the old financial data of the company’s performance. The differences or
variances from the budgets are get from the performance of the departments and business
operations which should be frequently identified by manager by doing effective monitoring and
also find out the reasons behind such deviations which should not occurs on the future.
Some different useful budgets are mentioned as under:
Sales Budget: This budget involves the estimated sales volume and selling expenses.
The sales volume budget is derived from the company’s sales forecast and selling expenses
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budget consists of sales and administration expenses. It gives detailed break-down of estimates
of sales revenue and selling expenditure to the manager of the company.
Advantages: -
- It is helpful to estimate the future sales to the business.
- It is useful to the manager of the company to forecast sales and selling expenses to the
particular product which they want to sale in the future.
Disadvantages: -
- This budget does not always forecast the accurate future events which occurred any
time.
- It uses so much time to prepare and does not simply adopted by the all members of
the company.
Production budget: After the sales budget is completed, the company can prepare the
production budget. This budget is based on the expected level of sales, changing levels of
inventory and also includes the decisions about outsourcing production, if the company will
purchases finished products or parts from an external supplier (Hiebl and et. al., 2015).
Advantages: -
- Resources, machinery, and labor hours can be used to the maximum extent.
- This budget uniforms the production process without any interruptions.
Disadvantages: -
- It increases the cost of the product if the resources are not effectively utilized and
there are wastage in the production.
- When the production process cannot attain its targets, it unbalances whole the process
of the production.
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Cash budget: A cash budget is a statement in which estimated future cash receipts and
payments are calculated in such a manner as to reflect the forecast cash balance of a business at
defined intervals. A cash budget can give warning of potential problems that could arise so that
manager can be prepared for the situation or take action to avoid it.
Advantages: -
- This budget helps to forecast the future cash inflow and outflow to the manager of the
company.
- It helps to maximize the profit because the flow of cash inside the company.
Disadvantages: -
- It ignores time value of money.
- It ignores cash flows after the payback period and also does not measure the
profitability.
B). Different types of costing systems which are used for preparation of budgets:
Actual costing system: The estimated cost of the actual costing assists the company to
make the budget which involves the actual cost and used the actual amount. It does not consider
the standard cost in it.
Normal costing system: The normal costing involves the actual direct material, labor but
the manufacturing overheads are involved in the budgeted form in the budget. In this system the
manager is concern on budgeted or estimated cost of the operations which is include n the
product development.
Standard costing system: The costs which are standard or estimated are charged to
production processes which help the company to control the cost while making the budgets. It is
best system for the company for achieving its targets on the time.
C). The importance of budget as tool for planning and control purposes:
The planning tool helps the company to make the budgets so effective which is easily
adopted by the departments or divisions (Jalaludin, Sulaiman and Nazli Nik Ahmad, 2011). The
SCORO and PROPHIX are two effective software which reduces the work load on the company.
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This software helps in planning of strategy, reporting of the management accounting and
information, budgets forecasting, etc. This software is easily used by the users to access the
information which they want. All the data are stored in the cloud- based management system.
M3
Planning tools helps to forecast and scenario which could assist in forming the
organisational activities in a most effective manner. Forecasting tools also assist to plan future
transactions and subsequently scenario tools for contributing in evaluating the risk which are
linked to them. Which ultimately assist the organisation in order to make the business in order to
make an efficient strategies.
D3
There are different and effective financial tools which are utilized by the company to keep
check on the financial error in the whole business (Zang, 2011). Key performance indicators,
financial governance, Benchmarking, and Budgetary plans are used by the company in order to
prepare a good financial system in the company and also rectify the financial problems in whole
process of the business. By using these tools, the company would generate its ability to find out
the risk and also respond to this risk in most appropriate manner.
TASK 4
Balance Score card approach for responding financial problems and compare:
Balance score card approach is the tool through which financial problems in a business
can be respond in an effective manner. Tech(UK) is implementing BSC approach which is the
evolutionary process.
Tech(UK) produces particularly have special charger for retail outlets. This is observed
from their past year financial statements which firm achieve the loss of £1.5 million.
Management accounting renders high number of tools and approaches that assist to overcome
from the financial related problems. This is highly said by the auditors which balanced scorecard
approach assists Tech(UK). To efficiently respond finance related issues.
Balance score card approach: This approach is implemented in the strategic
management that could assist in determining and enhancement of the internal functions of the
organisation and concentrates on the achievement of the better external outcomes (Vakalfotis,
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Ballantine and Wall, 2013). This kinds of the tools assist in calculating and also provide
feedbacks to the company. Data gathering tool in quantitative terms is crucial process for
manager that could improve their decision making power. There are various aspects which assist
the Tech UK to overcome their losses which are mentioned hereunder:
 Render emphasis on the crucial aspects.
 Emerge strategies to guide employees.
 Setting of the pre-set objectives.
There are four perspectives have been elaborated as under:
1. Financial Perspective: BSC approach implements financial performance measures, like
net income and return on the investment, as whole for the profits firms apply them.
Financial performance measures a common language for assessing and comparing
organisations. People who renders funds to the organisations, like financial institutions
and shareholders, based upon financial performance which elaborates in identifying
whether to lend or invest funds. Appropriately designed financial measures could render
total view of a company success.
2. Customer perspective: In this, managers of the Tech (UK) determine customer and
market segments through which organisation unit would compete and elaborates of the
business unit's performance under these targeted segments (Bodie, 2013). This kind of
perspective normally covers diverse core or generic measures of the prosperous outcomes
from a most renowned and applied strategy. The main outcome calculates customer
satisfaction, customer retention, new consumer acquisition, consumer profitability, and
market shared in the targeted segments. But customer perspective must likewise specific
measures of the value propositions which an organisation would deliver to consumers in
the targeted market segments.
3. Internal-Business-Process Perspective: in this thing, managers of the cited organisation
determine the critical internal processes through which an organisation must need to
excel.
4. Learning and growth perspective: For incentive aims, learning and growth perspective
concentrates on the capabilities of the people. Crucial measures for assessing managers'
performance will be the employee satisfaction, employee retention and employee
productivity.
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a). Employee Satisfaction: This identify the importance of the employee morale for enhancing
productivity, quality consumer satisfaction and responsiveness to the situations.
b). Employee retention: Organisations committed to retaining employees identify that
employees emerge organisation-particular intellectual capital and render a valuable non-financial
asset to the organisation. In addition to this, organisations occur costs at the the time when they
must find and hire sound place people who leave.
c). Employee Productivity: This identifies an importance of the output per employee.
Employees form physical results, or financial output (Lukka and Vinnari, 2014).
These four perspectives helps to overcome the financial constraints in an effective
manner. This can be rightly said that the management of the organisation would requires to make
a business objectives in an effective manner.
IMDA tech is the other firm which implements the approach of just in time to overcome
from the finance related issues.
Key Performance Indicators: This is an efficient model for multiple performance
strategies. This ability to distill diverse complicated systems of data into well processed numbers
is a close for the companies which want to enhance their efficiency. There are so many KPIs
which can implement in a cited organisation for meeting the financial constraints in an effective
manner. By using this technique, cited company can measure their value which could reflects
the organisation for attaining key business objectives. Tech (UK) use KPI in order to assess the
success rate at achieving targets. Selecting an accurate KPI would based upon the industry and
which part of the organisation for looking to track. Each division would implement diverse KPI
kinds in order to calculate success which are relied upon particular business goals and targets.
By using this tool tech UK can measure its performance to the IMDA tech company so
that the performance of the organisation in an effective manner in an effective manner.
(Wickramasinghe and Alawattage, 2012).
M4
Contribution of the cited management accounting systems in ignoring of the costs which
could gain the sustainability. These are:
 Implementation of provisions of diverse kinds of account to form an efficient business
plans that could enhance an entire performance (Hilton and Platt, 2013).
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 Tools of standard costing assists in limiting of costs and contributes in enhancement of
the profit margin.
CONCLUSION
From the above mentioned report, this can be rightly said management accounting plays a
most crucial part which assist to consider by the management of the of cited organisation. For
enhancing the performance of each division and contributes their efforts to meet out from
financial issues. This assists the manager of the cited organisation in order to incorporate the
plans that could direct employees in order to attain their task throughout the stipulated time
period. There are diverse kinds of budgets which are made throughout the company such as cash
budget, production budget, sales budgets and others. Apart from that diverse kind of advantages
are made by the company for making of these benefits such as more indulgence of employees,
high productivity and more. Benchmarking and just in time two main tools which assist the tech
UK in order to reduce their losses and earn more revenues.
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REFERENCES
Books and Journals
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