Management Accounting System Analysis: Unicorn Grocery Report

This report analyzes the management accounting system for Unicorn Grocery. It begins with an introduction to management accounting, its functions, and its importance in achieving organizational sustainability. The report then details the different types of management accounting systems, including cost accounting, inventory management, price optimization, and job costing systems, along with their essentials. It further explores various reporting systems used in management accounting, such as performance reporting, accounts receivable reports, job cost reports, operating budgets, and inventory management reports. The advantages of using a management accounting system are discussed, emphasizing its role in improving efficiency and profitability. The report also includes a critical evaluation of reporting systems and costing methods. Finally, it discusses planning tools, their advantages and disadvantages, and analyzes techniques for resolving financial problems, offering measures to overcome financial issues and comparing them with other companies.

MANAGEMENT
ACCOUNTING

Table of Contents
FROM: MANAGEMENT ACCOUNTING OFFICER..................................................................1
TO,...................................................................................................................................................1
GENERAL MANAGER..................................................................................................................1
UNICORN GROCERY...................................................................................................................1
SUB: MANAGEMENT ACCOUNTING SYSTEM .....................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Types of management accounting system and its essentials................................................1
P2: Different reporting system used in management accounting................................................3
M1: Advantages of using management accounting system .......................................................5
D1: Critical evaluation of reporting system ...............................................................................5
TASK 2............................................................................................................................................5
P3: Costing methods used in management accounting...............................................................5
M2: Accounting techniques analysis........................................................................................7
D2: Critical evaluation of income statements.............................................................................8
TASK 3............................................................................................................................................8
P4: Advantage and disadvantage of using planning tools...........................................................8
M3: Critical evaluation of planning tools.................................................................................10
D3: Analysis of techniques which is used in resolving financial problem ..............................10
TASK 4..........................................................................................................................................10
P5: Measures to overcome financial issues with comparing it with other company................10
M4: Analysis of financial problem ..........................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

FROM: MANAGEMENT ACCOUNTING OFFICER
TO,
GENERAL MANAGER
UNICORN GROCERY
SUB: MANAGEMENT ACCOUNTING SYSTEM
INTRODUCTION
Management accounting is a crucial aspect of an organisation that help in attaining future
sustainability for the company. It is simply termed as tools and techniques which provide
accounting data in order to carry out various activities like planning, controlling, analysing and
decision-making (Burritt, Schaltegger and Zvezdov, 2011). It guides managers in determining
critical issues, formulating plan and optimising the use of necessary resources. The report covers
different types of accounting system and its essential use in an organisation. Some other aspects
are related with reporting and costing methods which is used for their purpose of making critical
decision company. Further, this provide information about benefits and limitation of planning
tools those are associated with budgetary control. They understanding of financial issues that are
present in an organisation and measure used to over come all these problems.
TASK 1
P1: Types of management accounting system and its essentials
Management accounting: It refers to providing financial and statistical information to
business managers in order to make short-term as well as long term managerial decision. It helps
in identifying, measuring, interpreting, and communicating the material information which help
an organisation to achieve their desired goals. It is also considered as any form of accounting
that enables a firm to be conducted more efficiently its daily operations (Cooper, Ezzamel and
Qu, 2017). It help the team as well as organisation to work according to set standards in order to
make attain more effective results. MA is categories with certain variance report analyses which
is based on actual and standard performance of an organisation. This can be considered as
primary part of accounting system that facilitate managers to take vital decision in favour of the
company. Management accounting reports provide the details about the accounts in order to find
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out the company's sales revenue, accounts payable and receivable etc. The managers should need
to provide financial and statistical information in order to take decisions related to developing
new products and services, borrow money from the investors so as to help in financing the
company and to increases or decreases operating capacity of the business. With the use of correct
accounting system every issues related with development of an organisation can be resolved. The
issues are required to be overcome in short period of time so that it cannot get affect any other
segment of the department. In current time, there is lot of burden to manage financial records of
the company. Whether related with public or private Ltd organisation.
The efficiency can only be enhance by using appropriate tools which can help them to
generate maximum growth and profitability (Hoque, 2011). The base of future planning set only
after making necessary financial statements in more effective manner. In case of Unicorn
grocery, they need a system that can be so effective in recording financial transaction which are
performed by an organisation. The net profitability and stability can only be relies on results that
is generated by using different accounting system. For this purpose, managers need to analyse
information in related to sales, income, profit, stock position and performance of an individual
those are working for the development of an organisation. It enables the company to enhance
their profitability situation of business by identifying the core needs of internal management. It
plays a vital role in achieving their goals and objectives.
Advantage of management accounting:
 It help to bring uniformity in the business by making improvisation in cash flows through
budgetary control.
 It ensure highest possibility for getting return on capital employed through evaluation of
qualitative and quantitative information.
 MA leads to maximum utilisation of resources and improve efficiency through unwanted
aspects those are affecting the performances of an organisation.
There are different types of management accounting which are as follows:
 Cost accounting system: This types of management accounting helps in monitoring and
controlling the business operation and also helps in analysing product probability. A good
cost accounting system enables an organisation to compute cost of sale and means for
valuing inventories. It identifies the reasons being the wastage which helps in cost
reduction.
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 Inventory management system: This type for management accounting helps in
supervision of non-capitalized assets and stock items. It supervises the activities that start
form the manufacturer and end with sales (Kotas, 2014). It provides a detailed
information about new and returned products when the product stores in warehouses with
a motive to sell. It need to give more attention to the products till the delivery of that
products to their customers.
 Price optimisation system: This types of management accounting involves the decision
related to the price of the company's products. It helps in determining the response of the
customers towards the price of their products. It also helps in de terming the prices that
the company will achieve its desired objectives in form of maximising operating profit.
 Job costing system: It is helpful to tract total cost of labour used during the production of
activities. The overhead costs assigning to manufacturing costs to a particular goods or
batches of goods. Basically, the job order cost is useful in only that situation in which
product produced are completed different form each other.
P2: Different reporting system used in management accounting
In every organisation, it is necessary for them to work for betterment of the firms.
Growth and efficiency can only be enhanced by using correct accounting system and reporting. It
will help managers of an organisation to use essential information for taking crucial decision in
order to manage their operations. The report are made by taking all these information which are
collected from every department such as, finance, HR, operations and other areas. The overall
summary of information is transform into making financial statements. The investors of an
organisation used to evaluate all these statements for making crucial investment decisions (Otley,
2016). The future of company is depend upon these statements which is prepared by using
necessary information from concern departments. The sources of information is collected form
financial or non-financial modes.
In is necessary for Unicorn grocery to analyse various accounting information in order to
take crucial decision-making. Few useful data is collected form various financial records to
evaluated performance of the company in front of various stakeholders. Certain statements such
as income statement, balance sheet and other financial records are used by the shareholders to
plan their capital investments and other strategies in order to achieved future aims and
objectives. These are essentials for increasing growth and sustainability for the company in order
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to gain maximum profit in future times. Reports are mostly associated with various financial
activities and transaction done by Unicorn grocery during the one year of time period. Under
this, a well organise strategies is prepared in the ways to enhance the position and reputation of
company in order to gain market attention. The other aspects of this reporting system is to gain
benefits from other competitors those are associated in same line of business activities.
Accounting reporting is termed as one of the important tool for any organisation. In the manner
to determine proper outcomes for unicorn grocery a perfect system is required that can present a
well organise image of the company. This need to be positive at any point of time whether taking
any decision or make future strategies in order to gain maximum sales or profitability.
The basic objectives of using this reporting system is to analyse current position with the
past one. The long term objectives can only be attain if they are using correct reporting system.
The chances of getting exact amount of accurate information about performance of unicorn
grocery can easily be determine by using perfect accounting system reporting (Papaspyropoulos
and et. al., 2012). It is required by almost every department which is engaged in production
process. They can use it as in order to manage and control their every day transactions. It is the
primary responsibility of accounts officers to evaluate financial reports before reaching to any
sort of decision. It is necessary to do so as, if any rectification is required in it can easily be
resolved in the initial stage of the planning. There are various reporting system which are used
by managers in order to manage their daily transactions:
Performance reporting: In the way to make perfect decision-making in unicorn grocery
they need to make performance report. It consists of necessary analysis based on accounting
aspects of an organisation as well as individual performance. It is prepared by collecting
information from past and current year.
Account receivable report: Such kind of report includes lists of customers unpaid
information and unpaid bill through mention date. The objectives of this techniques is to
determine total recovery time of outstanding amounts.
Job cost report: It is refers with those costs that are associated with the manufacturing of
total units produce during the time. It consists of information about material, labour and
overhead. It is made in order to determine accurate cost which are incur during production of
every lot size.
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Operating budget: This report is related with manufacturing activities which is
associated with income and expenses those are generated by unicorn grocery during the time.
This main purpose of using this kind of report is to analyse total cost that are incur by company
over production of extra units. It can be evaluate by using sales, production and other budgets.
Inventory management report: It is known as one of the crucial report for an
organisation. The objectives of using this report is to manage and control stocks of unicorn
grocery (Renz, 2016). There are certain tools and techniques which is used in that manner such
as EOQ and ABC costing.
M1: Advantages of using management accounting system
It has been noticed that, management accounting system is an vital system that is used by
unicorn grocery to manage and protect there financial transaction. By this, more chances of
getting positive outcomes can be enhanced with the available resources. In relation to increase
future growth chances most of the companies are using effective accounting system for the
betterment of the business. There are different accounting system such as price optimisation and
job costing system are the two crucial system which can generate more reliable results. The
biggest advantage is to increase efficiency and profitability for the company. These can be used
for the purpose of taking decision in order to gain sustainability in coming time.
D1: Critical evaluation of reporting system
In unicorn grocery, every concern member or department is working as a team to
generate more positive outcomes with that of necessary results. It can be more useful for
determining financial position in order to gain maximum chances of attaining profitability. The
objective accounting reporting is to analyse performance and stakeholder stakes so that they can
increase there possibility of growth opportunities. Report are also used for the purpose of
decision making or investment planning for the up coming projects. Two crucial report are
inventory and performance report that can represent position of the company.
TASK 2
P3: Costing methods used in management accounting
Costing: It refers as that cost which a company is uses during production of products and
services. This particular aspects is essential for the firms to analyse total capital invested by the
company at development of the products. It can be affected by direct or indirect costs such as
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fixed, variable or semi-variable costs. Usually, it is termed as the costs which can measure in
financial terms that summarise certain efforts and resource which is used by the concern
managers in order to make transaction of goods to its customers. These are helpful in taking
crucial decision regarding future plans (Tappura and et. al., 2015). There are various costing
techniques which is used by unicorn grocery in their businesses to make effective analysis of
their net profit during the year. Some of them are discussed underneath:
Absorption costing: It is known as that costs which is related with the production of
goods and services. It consists of both variable and fixed costs at the same stage. The results are
always categories into fixed production costs as maximum of costs are associated with the
manufacturing of products.
Marginal costing: It is termed as that costs which is charged by the company with the
production of one additional units. It does not considered fixed costs. Because of which it is
known as period costs. The results are determined by using contribution per units at the time of
production.
Difference between both costing methods
Absorption costing Marginal costing
The cost which is incur by unicorn grocery can
only be determine as total cost which is used
during production process.
In this, just marginal costs are valued at the
time of manufacturing of products and
services.
If the finance department is using this method,
the per unit cost can be reduce with the extra
production.
Under this condition, contribution per units
will not get affected or changed with the
production.
It is associated with companies future
strategies and costs.
The short term planning and controlling can be
made by the management.
Net profit is the primary base of decision
making.
On the basis of contribution per units necessary
decision is made.
The sustainability is relies on external
reporting of financial data.
It considered, internal reporting system as
primary objectives of future growth.
Calculation of marginal costing through using Income statements
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Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2 - 7800
Closing stock: 100*13 - 1300 -6500
Contribution 11000
Less:
Variable sales overhead 500*1 500
Fixed overhead -1800
Selling and administrative cost expenses (800+400) -1200 -3500
Total Profit / Loss 7500
Income statements through Absorption costing
Particulars Amount
Sales 35*500 17500
Less:
Production cost 6+5+2+3 = 16*500
8000 8000
Gross profit 9500
Less:
Variable sales overhead 500*1 500
Selling and administrative cost expenses (800+400) 1200 -1700
Total Profit / Loss 7800
According to the above information, two of the curial costing methods is being used.
Unicorn grocery need to use these two methods in more effective manner to analyse net profit for
the company during year. Marginal costing is considered to be more specific and correct method
of taking investment decision as they are more accurate and reliable with the results. By this,
managers can make there planning for future in more effective and in efficient manner.
M2: Accounting techniques analysis
Perfect planning will always provide better results for the company. Organisation can
generate maximum benefits for further expansion and growth. For this purpose they are always
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looking for getting effective tool that can generate them more reliable outcomes for the
company. It has been seen that maximum of finance errors are arises in an organisation during
recording of transactions. These mistakes can easily be resolve by using right techniques of
accounting. Some effective accounting techniques are that can be used in an organisation are
conservatism, consistency and materiality. These can be more useful in getting accurate results
with the available information.
D2: Critical evaluation of income statements
As per the above calculation, it has been found that unicorn grocery is using two of the
most appropriate costing methods which can help them in getting exact value of results. The net
profit for the company is more if they are going with absorption costing as 7800. while, if they
are using marginal costing they are getting profit of 7500. The difference of 300 is analyse just
because of fixed expenses. It is not considered during computation of marginal costing. The
overall results are positive. The best ways to get more reliable results is to go with marginal
costing as they are more effective method which can be used for the purpose of decision-making.
TASK 3
P4: Advantage and disadvantage of using planning tools
Budget: It is a detailed plan of functions for some specific time period. It is termed as an
estimation of cost and expenses which a company is going to incurs at the time of production. It
is comprehensive framework of operation and financial strategies for particular gap of time. In
order words, it is a quantitative expression of operation plans of unicorn grocery for a definite
accounting period (Ward, 2012). Basically, it is prepared for one year but it can be extended if
results are not in favour of the company.
Essentials of budget preparation:
 It is prepared in advance which is based on future action plan.
 It is a monetary record that makes the administration think about the plan and act as a
well organise team to render more services at economical costs.
Budgetary control: It refers as useful tools or comprehensive system of budgeting that
assists management to carry out its function operations such as planning, coordination and
evaluation. This can be related with the part of organisation on structural basis into various
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section which is termed as budget centre (Merchant, 2012). It help to determine actual level of
performance with that against the budgeted.
Process of budgetary control system
Consult with the managers: Every data is vital for the company. Before preparing any
plan it must be communicated with managers so that necessity of budget can be evaluated in
proper manner. They are responsible for determine whether company is in need of any budget or
not.
Make effective assumption: As, it has been observed that budgets are always prepared
on an assumption basis that can help to protect their future losses. After making proper
consultation with the managers need to make assumption of total cost and expenses which is
going to be incur by the company.
Set organized data for budget to attain goals: In this process, a complete list of detail
information is prepared by considering all these data collected from every departments (Parker,
2012). It will help managers to plan their mission and vision in more specific manner.
Measurement of actual with standard: The actual performance of unicorn grocery is
taken into consideration to predicate growth and stability in an organisation.
Final review phase: Under this particular stages, entire budget is overlook so that any
mistake in can be resolved before implementing it into action.
Planning tools: It refers as one of the important tools and techniques which is used by
unicorn grocery in order to control their expenses and extra costs. Some of them are:
Functional budget: It is known as that budget which is used by departments and other
members of unicorn grocery in their daily operations. Such as sales, production and
administration budgets etc.
Benefits: It is used to determine total amount of capital requirement of amount which is
used to operate business function in an effective manner. It is used to compare actual figure with
the budgeted figures so that if any variances occurs it should be eliminated in an effective so that
the operation of the firm can be attained (The Advantages and Disadvantages of Budgeting,
2017).
Limitation: It is prepared on an assumption basis and the cost of preparing it is too high
as compare to other.
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Master budgets: It is related with various functional budgets that consists of projected
profits and loss statements, balance sheet and other statements that are prepared by an
organisation (Hoque, 2011). It is prepared at the end of year. It crucial budget for taking
effective decision for the company.
Benefits: The overall analysis is done with the single budget. The investors used to make
their valuable decision on this particular budgets.
Limitation: It is more time consuming as management need to wait for proper evaluation
of this reports. After that they reached out to a valid solution.
Cash budget: It is related with that budget which is associated with cash inflows and
outflows generated by the company during the year from various activities. The various activities
associated with this investing, operating and financing activities (Jansen, 2011).
Benefits: It is used to determine total cash inflows goes out of the businesses during the
one year of time.
Limitation: If the total cash recovery time is completed then its ignores cash flows
generated during that time.
M3: Critical evaluation of planning tools
With the use of planning tools in budgetary control a manager can attain their set
objectives in more quick time. The resources can be utilised in more efficient manner if
managers can uses right planning tools. The master budgets and cash budget are more useful
planning tools which can be more efficient for the managers to make necessary outcomes for the
company.
D3: Analysis of techniques which is used in resolving financial problem
In an organisation, it has been seen that maximum of their operations are get affected
with the inappropriate financial issues. Because of which unicorn grocery is not able to make
there plan more valuable. It will get affect its performance and growth of an organisation. To
overcome all these issues company need to use balance scorecard techniques to reduce financial
issues.
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TASK 4
P5: Measures to overcome financial issues with comparing it with other company.
It has been seen in most of the organisation that financial problems can affect the
performance and growth opportunities. The productivity can also be affect because of financial
issues. The main objectives of managers is to take crucial decision in order to gain their short and
long term objectives (Fullerton, Kennedy and Widener, 2014). Few financial issues which is
related with the organisation are lack of financial resource, cash inability is the most common
issues which is remain always with unicorn grocery as they are not able to meet out their
liabilities. Short term debts issues is always there with the managements. Some of the crucial
techniques are:
KPI: key performance indicators are termed as more effective tools which is used by the
company in order to determine financial performance of the company. It is done in more positive
manner so that more accurate results can be attain.
Financial governance: It is considered as government rules and regulation which is
made for the purpose of utilising companies resources.
SMART tools: It is known as more specific tools which is related with specific,
materiality, accurate, reliable and timely completion of plan (Albu and Albu, 2012).
Comparison with other company's
Unicorn grocery Zylla company
This company is dealing development of
grocery products. So they need as perfect
system that can control the financial issues
which are arises at operations level.
It is operating at large scale which is related
with multiple products. They required a well
organise system that can help them to record
there financial transaction.
They can use Key performance indicators in
their business to overcome different financial
issues which is originated at lower level.
As, they are operating at wide scale so they
required to use SMART tools and financial
governance as effective techniques to
overcome their financial problems.
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M4: Analysis of financial problem
It has been observed that financial problems can only be evaluated by using various tools
and techniques. These can detect issues in more effective manner and make necessary efforts to
reduce their impacts on Unicorn grocery. Some of them are key performance indicators which is
used for analysing financial performance of an organisation. Another are benchmarking and
financial governance is termed as more effective for resolving various financial issues. By using
these techniques unicorn grocery can attain more effective outcomes in more quick time.
CONCLUSION
From the above project report, it has been concluded that management accounting is an
effective aspects which is used for the purpose of getting more reliable results for there daily
operations. This project summarise with various information about, accounting, reporting and
costing method that is useful for the company. Different planning tool are used by unicorn
grocery to manage there budgetary control system. Measures to overcome financial problems are
discussed under this project. Overall, project is based on analysis of various accounting
information which is required by managers to take crucial decision for the coming time.
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REFERENCES
Books and Journals:
Online
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The Advantages and Disadvantages of Budgeting. 2017.[Online]. Available
through:<http://www.bifa.org/library/freight-management/finance/budgeting/the-
advantages-and-disadvantages-of-budgeting>.
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