Management Accounting Report: Cost Analysis and Budgeting at Unilever

This report provides a comprehensive analysis of management accounting principles applied to Unilever, a global organization operating in the UK. It covers various aspects of management accounting, including different types of management accounting systems, their essential requirements, and methods used for reporting. The report discusses the importance of management accounting in profit maximization, efficiency improvement, and strategic decision-making. It also delves into specific systems like inventory management, cost accounting, price optimization, and job costing. Furthermore, the report examines different financial statements, practical illustrations of absorption costing, and the advantages and disadvantages of various planning tools used for budgetary control. Finally, it explores how enterprises adapt their management accounting systems to respond to financial problems, providing a holistic view of Unilever's financial management strategies. Desklib provides access to similar solved assignments and resources for students.

Management
accounting

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
TASK1.......................................................................................................................................3
P1 Management accounting and its essential requirements of different types of
management accounting systems...........................................................................................3
P2 Methods used for management accounting reporting.......................................................5
TASK2.......................................................................................................................................6
P3 Calculating costs using suitable methods of cost examination to make an income
statement using marginal and absorption costs................................................................6
TASK3.......................................................................................................................................7
P4 Discuss advantages and disadvantages of different types of planning tools used for
budgetary control...................................................................................................................7
TASK4.......................................................................................................................................9
P5 Differentiate how enterprises are adapting management accounting system to respond
to financial problem...............................................................................................................9
CONCLUSION........................................................................................................................10
REFERENCES.........................................................................................................................11
Books and journals...............................................................................................................11

INTRODUCTION
Management accounting refers to a process which is related to identification of
different cost which is implemented by Organisation in order to generate the revenue
(Azudin, A. and Mansor, 2018). It include appropriate system which is based on the current
requirement of organisation where it audit financial reports statements and accounts in order
to analyse them and using them for benefits of organisation. Under the current report, it is
based on study of Unilever. It is a global organisation which is performing and business
environment of UK. Companies operating in various kinds of products and services which
may include healthcare, beauty products and many other. In relation to the current report it is
based on discussion about management accounting. In beginning of this report, there is
discussion about various kinds of management accounting and its tools. Along with this,
there is also discussion about various management accounting reports and their advantage to
organisation. In middle of this report, there is a discussion about different financial statement
as well as practical illustration of absorption cost. In last, it consist discussion about various
factors of management accounting and budgetary tools used in financial planning along with
identification of particular business situation and how organisation deals with them.
MAIN BODY
TASK1
P1 Management accounting and its essential requirements of different types of management
accounting systems
Management accounting is that part of accounting system which is related to
accounting of various management systems and identification of them in order to identify the
cost and revenue which are projected from the working of organization. It acts as an essential
part for every organization because it provides assistance to the management in observing the
cost and implementation of various strategies. This is also useful and managing different
function and providing assistance to stakeholders in order to identify the current business
position (Drury, 2018).
According to institute of management accounting "management accounting define
that part of management function with related to audit of different financial accounts of

organization in order to meet the financial obligations and identify the current financial
position of the firm. It is that part of business activity which enables organization to identify
appropriate pricing policy by analyzing different financial accounts and performing the
function to operate business in a effective way".
Management accounting is beneficial for organization in different aspects. Unilever
can also avail the benefits of management accounting. Some of these benefits are discussed
below:
Helps in profit maximization: Management accounting is directly linked to
profitability of organization and performing its function in an appropriate manner. Under the
management accounting concept, organization use different benefits and system which enable
form to perform. In order to evaluating the current position of organization in identify various
processes which are involved in the development of production. This will help the
organization in using appropriate function and managing dysfunction according to the
requirements and whose profitability (Hopper and Bui, 2016).
Increase efficiency: Management accounting within organization is also useful in
increasing the efficiency of firm and managing its function in an appropriate manner. This is
because it helps in identifying the system which are based on the current business
environment as well as analyzed the cost which is implemented by the organization on
different production services. This will help in utilizing the accounts of different individuals
and analyzing the performance which can be used to boost the profitability.
Different systems under management accounting
Inventory management system: Inventory management system is an essential part of
management accounting which is helpful to the organization in achieving its objective and
performing the function in an appropriate manner. This is helpful to the management of the
organization in order to identify the requirements and perform the function according to the
current needs. There are number of options which are used under the inventory management
system by Unilever. This is helpful to the manager in analyzing appropriate system and
functioning in a better way. Unilever follower varied product line which makes it compulsory
for organization to use appropriate inventory management system under the management
accounting. This enables manager to divide the products in three categories which are raw
material, finished well and semi process good.

Cost accounting: cost accounting is that part of management accounting system
which is related to cost accounting is that part of management accounting system which is
related to identification of different cost which are involved by organization in order to
producing the buy organization in order to producing the products and services. This is an
essential part of organization as it is related to different cost as well as helpful for the phone
in order to meeting the process of selling of goods and services. In context of the current
business environment it is essential for organizations such as Unilever to use appropriate
costing system where it can easily identify the cost and can decide the prices of the products
and services which it offer within the market (Lachmann, Trapp and Trapp, 2017).
Price optimization system: This is that part of management accounting system which
is related to calculation of various costs which are implemented by the organization in order
to generate the revenues and performing its function in an appropriate way. This system is
useful for organization in order to identify the customer behavior within the market and
discounting according to the needs and requirement of organization. Under this price of the
magician organization can follow the functions which are related to achievement of business
objectives and using this system to managing functioning. This system is also useful for
organization and deciding appropriate policies for the products and services offered by
organization with the market. In relation to the Unilever, organization is operating business
environment where it offer number of products and services this essential for organization to
use appropriate system which helped the form in achieving its business objective. In context
of the current business environment optimization system can be used by organization to
manage the function of different pricing policies and using an appropriate policy in
accordance with the competition (Langfield-Smith, Thorne and Hilton, 2018).
Job costing system: Job costing system can be defined as a system which is included
under the management accounting of organization in which form used to identify the cost of
particular job or activity which is performed under some separate task. It is essential for
organization analyses the functioning and use appropriate identification of each and every
cost which are implemented in different jobs. There are a number of options which has to be
used under the job costing system in context of Unilever which are helpful to the organization
in analyzing the cost of particular job which is performed by the management. Also provide
guidance to the staff according to the needs and requirements and fulfilling the function in a
way to achieve objectives.

It can be evaluated from the above that costing is an important part with organization
where it included under the management accounting system. There are number of
management accounting system which are useful for firm to achieve its business objectives
and perform them in an appropriate way.
P2 Methods used for management accounting reporting
Management accounting reporting
In context of management accounting which is also known as cost accounting system
there is great inspiration information which is received through the final accounting. There
are a number of reports which are involved under this system which are useful for Unilever in
order to manage its function and identify the current requirements. This also involve number
of systems which are related to accounting and bookkeeping period which are used to manage
the function as well as perform this function in an appropriate manner. Some of these
bookkeeping methods are discussed below:
Budget reports: these are very crucial reports which are considered under the
management accounting system and are important for organization in order to analyses the
company performance and identify the work for a small scale business. In context of Unilever
it is operating and a large-scale organization where company has to manage each and every
function by creating and overall budget to understand the schemes of the business. A budget
estimate made based on a previous experience of the organization which always helpful in
identifying the unforeseen circumstances which will rise in future. In context of Unilever
managerial accounting report related to budgeting are helpful in offering better employee
incentives as well as cutting the cost in recognized terms (Makrygiannakis and Jack, 2016).
Account receivable aging report: This is also act as an important part of managerial
accounting reporting system which involves identification of extended credit and account
receivable aging which are vital role within the organization. It is helpful in identification of
breakdown and remaining balance of the clients in order to specific time which is invested by
organizations and allowed the manager to identify the defaulter. This is also essential in
identifying the defaulter as well as using an appropriate action so that firm can easily manage
its credit policies and flow of cash at the time of requirement.

Cost management accounting reports: This is an important function which is
directly related to the managerial accounting computers of the organization and identification
of cost of different articles which are manufactured by the organization. This is an important
part because it is helpful in identification the raw material cost per overhead and any other
added cost. Of course report summary of different information which are essential for the
organization in order to perform in the capacity and realizing the cost price of the term of
selling. In contact of Unilever Company always manage these reports in order to identify the
inventory waste labor working hours and various overhead cost which are helpful in
managing and achieving the objectives (Malmi, 2016).
Performance report: performance report is those functions which are created by the
organization in order to review the performance of employees as well as performing the
function in an appropriate manner. It is an essential part for organization where manager can
use performance report to make strategic decisions about the performance of different
individuals as well as rewarding them about their performance. This is also useful in
identifying the current processes as well as performing in an appropriate manner so that
managerial accounting can be established in an appropriate manner and getting the insight
about the current performance of employees. In context of Unilever, organization is operating
with different functions which are helpful to the fore in achieving its objectives and
performing the functions according to the requirement where it can used to measure the
performance and achieve the objectives.
It can be evaluated from the above mentioned information that there are a number of
reports which are included under the management accounting system and are essential for the
Unilever to manage its function and perform effective systems so that it can achieve the
objectives. That's there are various function under this which has to be performed in order to
achieve the objectives and bring appropriate system.
TASK2
P3 Calculating costs using suitable methods of cost examination to make an income statement
using marginal and absorption costs
Income statement: Income statement can be defined as a fore financial statement of
an organization which shows profit and loss over a particular period of time. This is an
appropriate system which is helpful to the organization and determining the overall revenue

as well as deleting the expenses from both the operating and non-operating activities full stop
statement is one of the three statements which is used by the organization in order to identify
the financial modeling and accounting cost and other expenses of Unilever which
organization in on a particular time period (McLaren, Appleyard and Mitchell, 2016).
Absorption costing: Absorption costing can be termed as a part or element of full
cost of manufacturing or providing services. Observation cost includes all those cost of
material as well as labor which are also related to the manufacturing overhead. Business
Central part of organization where the cost of each center can be detected and direct or
indirect manager as these will be identified it audit is identify the appropriate price policy
which will be followed by organization for its production services. A separate calculation of
financial statement and absorption cost in relation to Unilever is discussed below:
TASK3
P4 Discuss advantages and disadvantages of different types of planning tools used for
budgetary control
There are number of planning tools which can be used by Organisation in order to
manage budgetary control. These planning tool are useful for Organisation in order to make it
effective and execute the functions in an appropriate way so that organisation can manage
profitability and work in a group directed behaviour.
Capital budgeting: Capital budgeting can be defined as a process which is used by
Organisation in order to identify the investment profitability to the organisation (Nitzl, 2016).
An appropriate system which is used by the organisation to identify the current function as
well as used to determine various functions which are helpful and long-term investment and
managing the profitability ratio of that particular investment. It is also analysed there are a
number of tools and techniques which are used by organisation to perform its function there
are various investment which has to be made by Organisation in this machine these tools and
other functions which require appropriate return. Capital budgeting is useful to the firm like
Unilever in identifying the returned from that investment which are made by Organisation in
respect to generate profit.
Advantage

 The major advantage of using capital budgeting in context of Unilever is that it is a
tool which is helpful to Organisation in identifying the written on different
investments as well as identification of risk which involved under this investment so
that form can easily take actions and identify the return on investment (Wagenhofer,
2016)
 There are a number of benefits under these systems which are directly related to the
organisational functions and helpful in estimating appropriate system as well as return
on investment.
Disadvantage
 The major disadvantage of capital budgeting is that it decrease the decision making
ability of organisation as well as decrease the opportunities because there is
continuous changes within the environment which impact on functioning of
organisational system.
Cash budget: Cash budget can be defined as an important part of budgetary control
which is related to identification of various functions and techniques which are essential in
the organisation to manage the flow of cash and achieve the objectives. In context of
Unilever, it is analysed that Unilever is performing in an appropriate way where companies
identifying different functions which help in managing the cash (Novas, Alves and Sousa,
2017). Is effective tool which is helpful in budgetary control as organisation can identify the
different functions and manage its profitability according to it
Advantages
 The major advantage of using cash budget as a budgetary tool is that it help in
identifying the current liquidity needs of organisation and using an appropriate action
so that form can perform appropriately analysing current situation.
 One more advantage of using cash budget as a budgetary tool is that it is helpful to
Unilever in analysing the functions as well as using the cash flow in an appropriate
manner to achieve business objectives.
Disadvantage
 It is also identified that there are a number of benefits of using cash budget but in
some extent it also act as a demerit for organisation such as Unilever because due to

changes in functioning and impact of this on working of organisation there are various
misleading situations which can create headache to the organisation.
TASK4
P5 Differentiate how enterprises are adapting management accounting system to respond to
financial problem
It is identified that current business environment is changing continuously where the financial
needs of organisation are also changing according to the time (Otley, 2016). This also gives rise to
number of financial problems which has to be managed by organisation in order to achieve its
objective. This can be analysed from the example of Unilever and nestle who are a prime competitive
in the market but facing same challenges in financial arrangements. These are related to allocation of
fund investment options identification of various financial issues like changes in working
environment and many other which are impacting on organisational performance.
Method Unilever Sainsbury
Liquidity, solvency and
debt ratio
Unilever is using appropriate
liquidator system which is
helpful to the organisation in
meeting the financial
obligation within market
where its working. Under this
there are various functions
which has to be performed by
the organisation in order to
manage its function and
achieve profitability. This
will help in identifying the
current financial situation of
organisation.
In context of nestle,
organisation is operating
within the market in which
there are various functions
which has to be performed by
the form and achieve this
objective in an appropriate
manner. This is helpful in
achieving the objective as
well as managing working
according to the needs and
requirements. This is helpful
to the organisation in
managing liquidity and
achieving the objective by
appropriate use of debt
equity ratio (Pelz,, 2019).
Profitability ratio Profitability ratios are also
important for Organisation in
It is also identified that their
global performing systems

order to meet the
requirements and solve the
financial issues this is
because Unilever use an
appropriate profitability ratio
to identify the current
profitability and make
decisions according to it
(Qian, Hörisch and
Schaltegger, 2018).
within the organisation which
impact on the standards of
global context. This is
essential for form to use
appropriate system which
will help in managing
profitability in which
organisation use profitability
ratio to stabilize the financial.
It can be identified from the above mentioned information that there are various
functions which can be used by Organisation in different financial situations and improving
the current issues in an appropriate manner (Quattrone, 2016).
CONCLUSION
It can be concluded from the above-mentioned information said there are various
functions which has to be performed by management accounting in order to meet the
requirements of stakeholders as well as analysing the financial cost and account. This is
helpful to the organisation in managing the function and achieving its objective according to
the needs and requirement. There are various functions which have to be performed in order
to analyse functioning and being a better firm. This is useful to the firm in managing the
function and achieving the objectives in an appropriate manner.

REFERENCES
Books and journals
Azudin, A. and Mansor, N., 2018. Management accounting practices of SMEs: The impact of
organizational DNA, business potential and operational technology. Asia Pacific
Management Review, 23(3), pp.222-226.
Drury, C., 2018. Cost and management accounting. Cengage Learning.
Hopper, T. and Bui, B., 2016. Has management accounting research been
critical?. Management Accounting Research, 31, pp.10-30.
Lachmann, M., Trapp, I. and Trapp, R., 2017. Diversity and validity in positivist management
accounting research—A longitudinal perspective over four decades. Management
Accounting Research, 34, pp.42-58.
Langfield-Smith, K., Thorne, H. and Hilton, R.W., 2018. Management accounting:
Information for creating and managing value. Sydney: McGraw-Hill Education.
Makrygiannakis, G. and Jack, L., 2016. Understanding management accounting change using
strong structuration frameworks. Accounting, auditing & accountability journal.
Malmi, T., 2016. Managerialist studies in management accounting: 1990–2014. Management
Accounting Research, 31, pp.31-44.
McLaren, J., Appleyard, T. and Mitchell, F., 2016. The rise and fall of management
accounting systems: A case study investigation of EVA™. The British Accounting
Review, 48(3), pp.341-358.
Nitzl, C., 2016. The use of partial least squares structural equation modelling (PLS-SEM) in
management accounting research: Directions for future theory development. Journal
of Accounting Literature, 37, pp.19-35.
Novas, J.C., Alves, M.D.C.G. and Sousa, A., 2017. The role of management accounting
systems in the development of intellectual capital. Journal of Intellectual Capital.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–
2014. Management accounting research, 31, pp.45-62.
Pelz, M., 2019. Can management accounting Be helpful for young and small companies?
Systematic review of a paradox. International Journal of Management
Reviews, 21(2), pp.256-274.
Qian, W., Hörisch, J. and Schaltegger, S., 2018. Environmental management accounting and
its effects on carbon management and disclosure quality. Journal of Cleaner
Production, 174, pp.1608-1619.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research, 31, pp.118-122.