Management Accounting Practices in Tesco: A Case Study

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MANAGEMENT ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
SCENARIO 1..................................................................................................................................1
LO 1.................................................................................................................................................1
LO 2.................................................................................................................................................1
SCENARIO 2..................................................................................................................................1
LO 3.................................................................................................................................................1
1. Advantages and disadvantages of different types of planning tools used for budgetary
control..........................................................................................................................................1
LO 4.................................................................................................................................................6
2. Compare how organisation adapting management accounting systems to respond to
financial problems.......................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Management accounting plays a very important role in success of every business. This is
because, it is branch of accounting that enable employers to make their decisions right.
Furthermore, it is also defined as maintaining and reporting information that helps to control
business functions. In addition to this, it is also considered as integral part of every enterprise
that helps to make strategic decisions at workplace.
Present study based on Tesco which is one of the greatest British Multinational retailer in UK.
They are providing different types of retailer products such as grocery items, food items, etc. In
order to focus on the present study, it focuses on management accounting and its principles that
every business must follow. Furthermore, it includes techniques and methods of management
accounting that helps to support positive outcomes at workplace. Moreover, advantages and
disadvantages of different planning tools of budgetary control has been explained in the business.
At last, comparison of different management accounting system will be explained that helps to
respond financial problems in the business.
1

SCENARIO 1
LO 1
LO 2
Title
2

Table of Content
In the present presentation, it assists to lead in essential requirements of different management
accounting system that adopted to gain more profitability. Furthermore, benefits of different
accounting systems also demonstrate in different organisational context.
3

Stewardship accounting: Management accounting system of Marks and Spencer possess role to
design the framework of cost and financial account. It assists to prepare reports that considered
for routine financial activities with operational decision making.
4

Long term and short term planning: Further role of management accounting is to forecasting
future plans such as short term, long term, strategic management activities, etc.
Developing management information system: Moreover, another role of management
accounting is preparing long term decisions that are forwarded to managerial personnel at all
levels to take corrective actions at right time in Marks and Spencer.
Cost accounting system: Cost accounting system is also known as product costing system which
is used by the enterprise for estimation of cost of products with profitability analysis, inventory
valuation and cost control. These considered as two main cost accounting systems in Marks and
Spencer such as job order costing and process costing.
Job costing system: Is system is used for assigning and accumulating appropriate amount of
manufacturing cost for an individual unit of output. Job order costing system is generally used in
Marks and Spencer when they are produce several units together.
5

Inventory management system: Inventory management system is generally used when Marks
and Spencer tracking inventory levels, orders, sales and delivers. It is also used in manufacturing
industry that creates appropriate work order, material bill and production related documents.
Price optimisation system: This system is generally used to considered mathematical analysis
which used by company to determine that how customers respond to particular problems related
with price and different channels. It is also generally used in Marks and Spencer to demonstrate
price that followed by them to operating in different consideration.
6

Budget report: Budget managerial accounting report can be defined as critical to measure
company performances which generate small businesses in large consideration. In Marks and
Spencer, overall budget will be understand with grand scheme in the enterprise. Managerial
accounting reports are generally related that offer better incentives, cut costs, etc.
Account receivable aging report: In this type of report, business generally offers credit to their
customers. Therefore, it assists to provide overview of credit balance. In Marks and Spencer, it
generally includes credit policies that align with consumers repayment capabilities.
Cost managerial accounting reports: Managerial accounting reports computes the costs in
articles that are manufactured. All material costs, labour, overhead and added costs that taken
into with deliberation. It is total divided with amount of products produced. Cost report generally
offers in Marks and Spencer to demonstrate summary of information.
7

Performance report: Performance reports are created in review performances of the company
and each employee work in a team. Department performance report helps to attain overall goals
and objectives of Marks and Spencer with performance related managerial accounting reports. It
offers deep insight into working of a company.
Job cost report: This kind of report shows expenses for specific project that financed by small
business of the company. In Marks and Spencer, it is usually considered to match with an
estimate of revenue which helps to evaluate job profitability. It assists to find higher earning
areas in the enterprise to focus on additional efforts.
Inventory and manufacturing: In this kind of report, Marks and Spencer need to maintain
physical inventory and products that are produce in the company. In this kind of managerial
accounting more efficient processes can be used which includes items such as inventory waste,
hourly labour cost, etc.
8

This is because, decision making process is continuously develop which would help to assess
overall business performances in the enterprise. It lead with purchase and investment as well so
that it is beneficial to prepare balance sheet and overall performances will be accomplish.
Moreover, profit & loss statement also shows financial resources that are likely to address
problems and issues as well.
9

Conclusion
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