Financial Statement Analysis and Management Accounting Presentation

This presentation provides a detailed overview of management accounting, focusing on its principles, methods, and tools for evaluating company performance. It explores different types of management accounting systems, including job costing, inventory management, and price optimization, and highlights their essential requirements. The presentation analyzes cost reporting, budgeting, and performance reports, alongside financial statements, using techniques like marginal costing to compute costs. It includes a recommendation to use management accounting information for financial performance analysis, emphasizing the importance of job costing and budget reports for business decisions. The presentation concludes with a formulation of an income statement, showcasing sales, costs, and profit calculations for XYZ Company, and is supported by relevant references.

Management accounting

INTRODUCTION
This presentation focuses on the critical discussion on
the management tool its methods and tools to evaluate
the performance of company.
The different types of management accounting system
and its essential requirements have been analyzed.
The application of the management accounting is also
done.
The different type of the management accounting report
is also identified.

IMPERATIVENESS OF MANAGEMENT
ACCOUNTING INFORMATION
 It is used to evaluate whether company has adequate resources to
implement proper business decision.
 It is also used to control the cost of the business and increase the
overall effectiveness.
 It helps in opting particular investment project in determined approach.

DIFFERENT TYPE OF THE MANAGEMENT ACCOUNTING SYSTEM
• Job Costing system- It is system for the
allocation of cost arise from the
manufacturing to other individual items.
• Inventory management system- This
system is used to manage the minimum
and maximum inventory quantity in the
business.
• Price- Optimization system- This system
is used to determine how client will
react with the changes in price of the
offered goods and services.
• Cost report- It shows the COGS and
process costing.
• Budget- It estimate the future expenses
and incomes (Utley, 2016).

ESSENTIAL REQUIREMENTS OF DIFFERENT
TYPES OF MANAGEMENT ACCOUNTING
SYSTEMS
 All the requirement related to the financial
management should be given.
 It should be used to make the better decision,
forming the customer base and utilization of the
resources.
 The management accounting has two principles
that should be followed such as (a) principle of
causality (b) principle of analogy (Nishimura, 2013).

METHODS APPLIED FOR THE MANAGEMENT
ACCOUNTING REPORTING
 Cost reporting- Identifying the cost and
expenses of the system.
 Budget-Estimation of the future expenses
and income.
 Performance reports- Estimated budget
performance of company with the actual
performance.
 Financial report-Showcase the financial
performance of company (Schaltegger, &
Burritt, 2017).

COSTS USING SUITABLE TECHNIQUES OF COST
ANALYSIS
• Computation of the cost using the cost analysis marginal costing method
• Contribution could be defined as differences between the sales and variable
expense
• The cost of each unit of cake under marginal costing method (Stafford, & Karszes,
2017).Cost of the 10000 units Calculated amount Costing of the process per unit
Cost of the direct material =£50000 50000/10000 £50
Costing of the direct labour = £30000 30000/10000 £30
Variable overhead =£20000 20000/10000 £20
Marginal cost per unit Burger £100

RECOMMENDATION
• Management accounting information
should be used to analysis the financial
performance of company.
• The job costing, budget and Performance
reports are the crucial reports to take
imperative busienss decisions.
• This should also be used to identify the
net profit, contribution per unit and
breakeven point of the business

CONCLUSION
• Accurate and tested with the proper graphs, charts and
tables should be used in management accounting
information.
• Cost and benefit analysis is the best method to
determine the contribution per unit, fixed cost
expenses and net profit earned by company.
• Controlling, planning and analysing are the key
imperative points of the management accounting
information.

FORMULATION OF THE INCOME STATEMENT OF XYZ
COMPANY
Particulars Units selling price £ per
unit
value in £
Sales 10000 25 250000
Less: marginal cost of goods
Material costing 10000*50 =50000
Labour Costing 10000*30 = 30000
Variable expense costing 10000*20 =20000
Total marginal costing £100000 100000
Contribution gross 150000
Reduced with the other
expenses
30000
Net contribution per unit 120000
Reduced with the fixed cost
Fixed overhead expenses 40000
Fixed expenses. 30000 70000
Net profit 50000

REFERENCES
Nishimura, A. (2013). The Control Functions of Accounting and
Management Accounting. Management Accounting, 11-22. Seal W.
(2014). Management Accounting (5th ed.). Maidenhead: McGraw - Hill.
53(2), 590-606.
Utley, D. (2016). The contingency theory of management accounting
and control: 1980–2014. Management accounting research, 31, 45-62.
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental
accounting: issues, concepts and practice.Australia” Routledge.
Stafford, D., & Karszes, J. (2017). Precision Management for your
Accounting System.Australia: Pearson.