Comprehensive Management Accounting Report: Tech Limited Analysis

This report provides a detailed analysis of management accounting practices at Tech Limited. It begins by differentiating between management and financial accounting, highlighting their objectives, audiences, and time frames. The report then examines the significance of management accounting in decision-making, emphasizing its role in forecasting, budgeting, and performance enhancement. It delves into the cost accounting system, outlining its advantages and disadvantages, and explores the inventory management and job costing systems utilized by Tech Limited. The report presents various types of managerial accounting reports, including budget reports, financial reports, and inventory reports, and explains the importance of presenting information in a clear and concise manner. It further discusses different types of budgets, the budget preparation process, and the importance of budgeting in financial planning. The report concludes by summarizing the different methods of management accounting and their applications within Tech Limited. This comprehensive analysis aims to provide insights into how management accounting supports strategic decision-making and financial management within the company.

Management Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1 Presenting difference between management and financial accounting....................................1
2.Significance of MA in decision making...................................................................................2
3. Cost Accounting System..........................................................................................................2
4. Inventory Management System :.............................................................................................3
5. Job Costing System..................................................................................................................3
B). 1. Presenting Different types of Managerial Accounting Reports.........................................3
2. Importance Of Presenting The Information :...........................................................................4
TASK 3............................................................................................................................................4
a) Presenting Different Types Of Budget....................................................................................4
b) budget preparation process :....................................................................................................5
c) Presenting importance of the budget.......................................................................................5
TASK 4............................................................................................................................................5
Different way of Management Accounting.................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Management Accounting is the process which prepares the reports related to the
management and accounts to meet the basic need of the company. It help in short as well as long
term decisions . As Tech limited company is leading producing the special charger for the mobile
and other gadgets . In this report Tech Limited help in management accounting and how it help
in business firm to achieve the need of the company . In this tech limited present the budget
report and how it help to categories the fund to each department and another method is also used
i.e. balance score card approach which is used to solve the financial problem. It also depicts
different budget system and approaches which help in making the business run too long
TASK 1
1 Presenting difference between management and financial accounting
Basic Management accounting Financial accounting
Objective To plan the information and
set goals and then execute
them for future needs.
To show the end result and
show the financial position of
the the business.
Audience Information produce by the
internal parties like managers
and organization
Information produced by the
external parties like
shareholders
Optional It is not legally required by the
company
It is legally required or
mandatory.
Focus Main focus is on present and
future (Difference between
management and financial
accounting, 2018)
Main focus is on the past
history
Time phrase Made daily,weekly, or
monthly
Made at the end of the
financial year or semi-annually
too
Format Format may be informal and
assigned by the managers
Need some specialized formats
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2.Significance of MA in decision making
Management accounting help in decision making as it provide the basic criteria for the
future goals to achieve the management funda . As Tech Limited need to increased the sales
according to the need of the consumers then it is must to maintain the management accounting .
Management Accounting help to control the system of the organization and this control needs a
contraction between the planned activities and unplanned activities (Ward, 2012). Overall the
complete and detailed information is needed by the managers and is not possible in the case of
the financial accounting and through the management accounting only we can conclude what is
the basic need assign to the employees. The management accounting plays an important role in
forecasting and budgeting process also. As management accounting provide complete
information and help to take better decision for a company. Using management accounting tech
limited can easily enhance the performance level and identify the exact inventory available in the
company. Whatever the information is present by accounting process this help Tech limited to
take relevant decision. Various techniques are used such as marginal costing, absorption costing
are helpful to know the current situation of material. To decide pricing, it is necessary to take
information from management accounting and this will help to take better decision for the
customers.
3. Cost Accounting System
A cost accounting system is a process which is used by the Tech Limited to knowing the
price of the product for their comparison purpose as well as to check the stock valuation and
controlling the prices of the product. For using the cost accounting system a business should
must know whether the product is going to earn profit or not. As Tech Limited know the actual
price of the product is quite crucial for the owners and managers also. Cost accounting is mainly
used by the firms to know the rates and help to show the profit and stock valuation of those
product (Parker 2012). A cost accounting help to track all the raw material which goes through
all the production level of stages and after some time it converted into output. This accounting
help to suddenly credit all the raw material and debit the goods which are in process account. It
involves the creation of the estimated cost of the product in all activity.
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Presenting advantages and disadvantages of cost accounting system:
Advantages
 identifies the valid reason of profit and loss .
 Help in decision making power of the business
 managing the cost accounting help in preventing the fraud system
Disadvantage
 only past records are available for decision making power.
 The calculated cost is always not correct during the final reports.
 It is quite rigid form and not allow to solve all the purpose of the project.
4. Inventory Management System :
As Tech Limited also use the inventory management system and it is the process which
records the moving products into and out during the marketing purpose and it see whether the
product is in exact location or not and can figure out the exact location during shipping. Earlier
the inventory system is done by the cardex system but now a days the whole system is based on
the system software. This is done to improvement in communication power and technology
updated and use of extra technology (Atkinson and et.al., 2012). Earlier the registers are made to
records the system in and out but now the system entry is needed to know what is available in the
stock. By the help of inventory management system the manufacturers will easily know about
the material and shortage of the product can also be identifies .
For example: using FIFO method, tech company will able to determine the exact
inventory on hand at the end of accounting period. This inventory method will assumes that the
first inventory which is manufactures by the company should be sold first and new product
remain unsold. Through this, the cost of old inventory is assign first then the newer inventory.
5. Job Costing System
Tech Limited company use the job costing system and it divide the manufacturing cost
into the overhead, direct material and the labor . Every business need to make more money and
earn more profit and job costing is the best way for earning more profit. Job costing uses the
various types like direct material, direct labor and overheads incurred during the pricing of the
product (Wickramasinghe and Alawattage, 2012). At last the job profitability report is made to
see the overall profit and loss statement of the firm, but it is possible in specific or particular job
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field only, as it doesn't show the whole scenario of the product. When the products of firm are
not identical, then using job costing is the best tool to allocate the cost of every product and it
also help to keep tracking the order of expenses and now in modern times Tech limites uses
computerizes job costing system in order to improve cost control and help to maximizes its
profit.
B). 1. Presenting Different types of Managerial Accounting Reports
1. Budget Report : budget report is made just to tell how much money is allotted to each
department and what is basic need of the department . It shows the company's cash flow
and the expenses side to the managers and the owners .Tech Limited uses budget report
in order to identify whether the company had enough budget to spend or not. This report
can be made weekly or monthly it depends on the requirement of managers.
2. Financial Report : this report shows the exact position of the company and show the
financial status of the company . It is the overall sum up of the whole reports and give us
the net figure of our profit or the loss. Tech Limited also uses this report in order to know
the exact turnover during a year. This report help are generally made at the end of the
year. This report show all the head in summarize form and number of categories shown in
profit and loss account.
3. Inventory and Manufacturing reports: it shows the stock valuation of the firm and show
the in and out of the product (Merchant, 2012). The shortage of the product can also be
identify using this report . Tech Limited also uses this report in order to check the
presence of stock in a company. The report help to determine the exact amount of
transaction done during a particular time.
2. Importance Of Presenting The Information :
There is the need to present the reports in prescribed manner because making the reports
in complex manner can creates wrong impact on consumer and other business field. By making
the reports in the prescribed manner help to understand it in good way and once a person can
read this can clearly suggest their own views too (Hofstede, 2012). The calculation should also
be so fast and in readable form so that user can also be calculate it and solve the query. The user
should have the knowledge of the accounting and then only he can serve a good output for the
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business. By making the reports more complex will slows down the reputation of the company .
By making the reports in simple form can enhance the reputation and knowledge too .
TASK 2
Income statement preparation as per marginal and absorption costing method
Absorption Costing method : under this method, all the direct cost are uses in order to uses all
the extra expense incurred. It uses both fixed as well as variable cost.
Marginal Costing Method: Marginal cost only focus on variable cost. This method only sum up
all direct labor cost, expenses and overhead only. It does not consider both factor. That is why
not used by companies.
Amount in Pound£
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By doing numerical assessment, it has identified due to the variations take place in
manufacturing cost profitability determined under absorption and marginal costing differs
significantly. Moreover, absorption costing method considers both fixed and variable expenses
while determining manufacturing expenses.
TASK 3
a) Presenting Different Types Of Budget
There are many types of budget which Tech Limited company can used and they are mention
below:
Cash Budget : it determine whether the cash inflow is done on timely basis or not and it
managing the working capital of the business. Tech limited uses cash budget in order to know
the exact cash flows during a particular time.
Advantages are :
 it help in minimizing the cost and maximizing the profit.
 it help to coordinates the activity of all the department.
Disadvantages are :
1. its success only depends on the cooperation of the staff and the employees.
2. it may take long time to achieve the future goals (Bloch Blumberg and Laartz, 2012).
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Master Budget : it is the collection of all the budget it may be smaller or longer which is
used by the company. Master budget is mostly a management strategic plan which help to take
decision for future. This budget is also useful by Tech Ltd in order to take decision for current
year forecasting.
Advantages are :
1. the whole scenario of the business related to financial matter can show here.
2. which budget get harm to business can show in this budget only and can get rid of this
Disadvantages are :
1. it is lacking of the particular data which means that not be able to determine the spending
during the month.
2. it is difficult to read and update because of many categories and numbers that are include in
the budget.
b) budget preparation process :
In Tech Limited company the budget preparation process is used to determine the pricing
and different costing system. As the budget assumption needs to update and then se whether the
fund is available or not for spending purpose. The foremost basic step comes while making
budget is to update the budget and the company need to creates the scenario of the budget and
then comes to see whether the fund is available or not and need to see it during the period only.
After it create the budget packet as it is necessary to allot the budget to each of the department fo
extra expenses. After creating the budget issue the budget to each of the department and also
state the drafting them (Grigoroudis, Orfanoudaki and Zopounidis, 2012). Then obtain the
budget from each department to see the revenue and available fund. And if there is the need to
update the budget then update it also and then review the budget budget by the senior team and
they will show the exact position of the company. After seeing the budget issue the budget and
distribute it to all the authority and then load it where it necessary.
c) Presenting importance of the budget
Budgeting is important in every field and it help a company to see the reality and to
watch the actual position of the business in the financial criteria. The spending role of the Tech
Limited company is also decreases and budget only help in making the future goals. Work will
be in the progress if the budget is under control (Grigoroudis, Orfanoudaki and Zopounidis,
2012). The budget is just help the company to help in emergencies and to laid off as the money is
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kept for future emergencies and it is the basic need of the company to check the funds available
to the firm and to met out the need of the company as well as the consumer .
TASK 4
Different way of Management Accounting
As Tech Limited company is facing the problem and has loss of 1.5 million, the
company's auditor help them and give advise to use the Balance score card method to raise from
its financial problem of loss. As balance score card help to improve the business activity and the
communication between the managers and the employee or it may be from shareholders also. It
always keep eyes on four main prospectus which help the company to focus and outstanding
performance . It act as a mediator between the staff and the managers. Its not easy to balance all
the four prospectus but balance score card done it and the basic need is to update it completely. T
The first perspective comes is Financial, which help it to solve the financial problem.
Financial status of the company help to achieve the main goals of the firm, particularly it help in
high level going process only to run the company in this competitive world. The next perspective
come is Customer, as it is the basic need of the firm or company to see the need of the consumer
and to fulfill the demand, basically what is the trend and what is the need of the consumer and
timely delivery is done or not this are the small things which we need to keep in our mind
(Banerjee, 2012). Another one is related to internal business process , what is the basic life cycle
of that product and the need of the product is actually or not . The internal business process is the
foremost basic need of the company like the mutual relationship should be good and there is no
interference among the employees. Lastly comes learning and growth this proves the importance
of balance score card that what is the need to improvement in the system and how to grow and
develop new ideas and innovation to the completion of the product.
As balance scorecard is basically become a key component of the structure approach
corporate strategic management. As Tech limited company use this method which is not so
complex and rigid and the basic need of the company is to encourages the identification of high
level of financial measure. The main advantages of using the balance score card method is to
help in learning the business more and help in growth too in the competition world. It also
encourages the identification of the customers as what is the basic need of the recent trend and
they are fulfilling it or not (Bodnar and Hopwood, 2012). The amount of sales is actually the sale
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that company is selling. The another positive impact of balance sore card is it makes the business
in another way and achieve the goals of future needs. That is why the auditor suggest them to use
this approach and it is definitely successful in future and achieve the goals too.
CONCLUSION
From the above report based on the management accounting and it actually affect the
financial growth of the business and the company. We conclude that there are different budget
system that has their own significance and to run the business in smooth and longer time. As we
can conclude that balance score card is the method by if a company faces the problem of loss can
also gain again. As the report gives all the information about the budget system and their
advantages and disadvantages also , so we can conclude that it is best in all way .
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REFERENCES
Books and Journals
Atkinson, A. A. and et.al., 2012. Management accounting: Information for decision-making and
strategy execution. Economic Horizons. 14(3). pp.209-211.
Banerjee, B., 2012. Financial policy and management accounting. PHI Learning Pvt. Ltd..
Bloch, M., Blumberg, S. and Laartz, J., 2012. Delivering large-scale IT projects on time, on
budget, and on value. Harvard Business Review.
Bodnar, G. H. and Hopwood, W.S., 2012. Accounting information systems. Upper Saddle River:
Pearson.
Grigoroudis, E., Orfanoudaki, E. and Zopounidis, C., 2012. Strategic performance measurement
in a healthcare organisation: A multiple criteria approach based on balanced
scorecard. Omega. 40(1). pp.104-119.
Hofstede, G. H. ed., 2012. The game of budget control. Routledge.
Merchant, K. A., 2012. Making management accounting research more useful. Pacific
Accounting Review.24(3). pp.334-356.
Parker, L. D., 2012. Qualitative management accounting research: Assessing deliverables and
relevance. Critical perspectives on accounting. 23(1). pp.54-70.
Ward, K., 2012. Strategic management accounting. Routledge.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches
and perspectives. Routledge.
Online
Difference between management and financial accounting. 2018. [Online]. Available through:
<https://www.accountingtools.com/articles/what-is-the-difference-between-financial-and-
managerial-acco.html>.
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