Management Accounting: An Analysis of Unilever plc

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Management Accounting
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Table of Contents
Task 1.........................................................................................................................................................3
Part 1......................................................................................................................................................3
Part 2......................................................................................................................................................6
Conclusion..................................................................................................................................................9
References................................................................................................................................................10
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Task 1
Part 1
Management of accounting is the biggest factor for achievement in every Unilever plc. It helps
in managing the activity of the Unilever plc. So that the Unilever plc. Can able to work
according to the given goal. It is the most important factor for increasing the profit of the
Unilever plc. And also helps in the development of the company. Usually, management helps in
making the budget of the Unilever plc. So that the company can able to get its target in the given
time set by the Unilever plc. (Fisher and Krumwiede 2015)
Types of management accounting
1. Inventory management accounting: - inventory means goods for which the company is doing
its business. Management of inventory is done by inventory management. It is very important to
track the flow of inventory inside as well as outside the company so that the closing stock can be
determined and also helps in finding the demand for the product in the market.
2. Cost Management Accounting: - It is the accounting system in which the cost is ascertained by
the department of management. Usually, it is very important as it helps to increase or decreasing
the sale of the organization and also its effects on the profit of the firm.
3. Job-cost method: - it is the costing method in which the costing is done on a particular job so
that it is very easy to determine the factors which are required for a particular job. As the job
costing usually based on the particular product or the product which follows the same pattern of
manufacturing, because of it easy to apply the job costing.
4. Price-optimization system: - it is the system of accounting which is done to finding the effect of
change in price to the sale of the product in the market so that that possible outcome can be
determined and the decision can be taken according to it (Mendels 2017).
Methods used in the management accounting report
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1. Job-cost Report: - it is the report which usually helps the management department regarding the
analysis of the factors which affect the job-costing regarding the valuation and at the time of
manufacturing. It is a very important report for the particular product as job-costing is applied to
the similar manufacturing process and its product.
2. Cost accounting report: - it is the report which shows regarding the cost of the product and its
effect during the manufacturing process and also during the sale period. It is very important to
determine the cost of the product for the future and also helps in finding the profit of the
company.
3. Inventory Report: - it is the report which shows the flow of inventory during the accounting
period. It is very important for a business whose main work is the sale and purchase of the
product. As per the report of the inventory, it shows that the current sale during the accounting
period and also helps in improvement in the manufacturing of inventory so that the sale can be
increased and profit gets maximize (Haroun 2015).
Benefits of management accounting
1. Provide better decision making: - management accounting helps in making a decision based on
the activities which are done in the organization. It is very beneficial to the management
department as decision making helps them to the allocation of resources and also if the decision
is taken by the management team which leads to huge growth and expansion of business, it is
useful to the organization only.
2. Planning is the main activity: - the planning is the only activity which leads to the achievement
of the requirement of the business. Planning is done to achieve the future goals which are set by
the organization so that proper growth can be done in the organization.
3. Proper organization of resources: - The management of accounting helps in analyzing and
arranging the information which is collected from any source. It helps the organization as the
relevant information is kept with them and unnecessary information is rejected (Fisher and
Krumwiede 2015).
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Interpretation of the management system with reporting as base
1. The interpretation usually is based on the cost accounting and cost accounting report. The
combination of both helps in cost analysis to the origination which helps in bringing the balance
between the cost and sale volume so that the profit can be maximized. Cost is usually based on
the manufacturing process as the change in the cost of manufacturing factors leads to a change in
the total cost of the product, the change in manufacturing cost is determined by the cost report
prepared by the management department (Mendels 2017).
2. This interpretation is based on the inventory and its flow. Usually, an inventory report shows the
allocation of inventory resources on the manufacturing process and inventory management helps
in managing the inventory so that market demand can be fulfilled by manufacturing according to
the needs of the market. It also helps in increasing the profit as if the increase in the sale implies
the increase in the profit. Inventory is based on the demand and stock available in the warehouse
to meet the market requirement (Haroun 2015).
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Part 2
Planning Tools These are instruments that guide the organization to take steps for the
implementation of certain programs that can lead the firm to success. They provide a detailed
description of the areas that need to be taken care of while raising the productivity of the
company. These tools are used for strategic, tactical and operational planning of the resources
that are used and will be needed in the future for better performance.
There are different types of planning tools that are part of accounting that are applied by the
company to maximize profits and increase productivity at certain levels. Several types of
planning tools are:
 Benchmarking It is a very vital tool that is used by the organization to measure the
performance of the company. It describes the set standards of the company which is used
to compare with the other firms with similar products in the market. The main aim of
benchmarking is to scan opportunities for improvement in the internal management of the
firm (Lopez-Valeiras, et.al., 2015). It is applied to achieve the highest profit earning
performance. There are different types of benchmarking which is used by the managers to
figure out the best method for improvement. The types are- Competitive, Functional,
Generic and Internal.
 Cash Flow Budgeting This is a budget that is used by the firm to estimate all the receipts
and expenditures that will occur in the business. These are made based on the previous
budget. These budgets are made monthly, quarterly or annually. Cash Flow budget is one
of the most critical elements of running a business. It is forecasted based on the costs
incurred in every activity of every department. This budget helps the organization in
controlling the costs and helps the firm in reducing its unnecessary expenses. The main
aim of cash flow forecasts is to predict future financial liquidity over a certain period
(Kamal, 2015).
 Break-even Analysis It is a technique majorly used in manufacturing companies to
figure out the status where the company does not face any profit as well as loss. It helps
the organization in determining what the company has to sell in a set time period to cover
the costs of doing business. The break-even point is calculated based on variable costs,
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fixed costs and revenue earned on units per sale. This tool guides the managers in the
pricing structure and lets them know the number of goods or services they need to sell to
attain profits (Anderson, et.al., 2015). It also helps the organization to predict the effect
of changes in the sales price.
 Activity-Based Costing This method of costing is also used by manufacturing
companies to allocate the overhead expenses to specific products. This system recognizes
the relationships between the costs, overhead activities and the manufactured goods and
services. It is not possible to assign all costs under this method. Indirect costs such as
management and office staff salaries are examples of exemption. This method of
accounting enhances the reliability of the cost data which results in producing near to
accurate costs (Henri, et.al., 2016).
There are certain key advantages of using these tools for enhancing the growth of the company.
Few of which are being discussed as below:
Advantages Benchmarking Cash Flow
Budgeting
Break-even
Analysis
Activity-Based
Costing
1. This process
helps the
organization in
finding out the
features which
can lead the firm
to profitability.
It helps in
avoiding excess
expenditures.
It helps the firm
to analyze the
difference
between the
fixed and
variable costs.
This method
brings accuracy
and reliability in
the Product
Cost.
2. It helps in
improving the
current
performance of
the company.
It analyses every
activity involved
in the production
and the costs
involved in it. It
also gives an
It helps in
predicting the
effects of cost
and its changes
in the
profitability
It identifies the
cost behavior
and helps in
reducing the
costs that do not
add any value to
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idea of the
sanctity of the
costs.
(Anderson,
et.al., 2015).
the overall cost
of the product.
3. Benchmarking
aids the
managers in
enhancing the
quality of work
which is being
done. This
results in higher
productivity.
With the use of a
cash flow
budget, it is
easier to monitor
future deficits
and takes
measures to
resolve them
(Kamal, 2015).
It helps the
management in
controlling, pre-
testing, and
coordinating all
the departmental
activities.
It is focused on
every activity
that is being run
in the production
process.
Through this, it
is much easier to
trace the
unnecessary
costs (Henri,
et.al., 2016).
4. This method can
help in lowering
the costs of labor
incurred in the
firm (Lopez-
Valeiras, et.al.,
2015).
The major
advantage of the
budget is that it
helps in
managing the
finances of the
company better.
This method
guides the firm
in locating the
margin of safety.
It works as an
indicator of how
the margin can
be increased to
earn more
profits.
It gives clarity of
pricing to the
managers and
helps them in the
process of
decision making.
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Conclusion
The report highlights the importance of the use of Management Accounting in Unilever. It is a
very important part of accounting that applies various tools and techniques to improve the
performance of the company and maximize its profits.
The report signifies the importance of different types of accounting systems that helps the
organization to monitor and control its costs, to attain a certain price with which the customers
are satisfied. Different types of methods that are used for reporting the analyses to the
management for making key decisions are also mentioned in the report.
It is also noted that there are several types of planning tools that are applied by the organization
to compare its performance with its competitors. These tools let the managers look deep into the
various activities that are held in the production process.
It is very important for the organization to accurately report the analysis of the activities for
making decisions that can benefit the firm. It presents a clear picture of the company’s
performance.
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References
 Anderson, D.R., Sweeney, D.J., Williams, T.A., Camm, J.D. and Cochran, J.J., 2015. An
introduction to management science: quantitative approaches to decision making.
Cengage learning.
 Bilal, M., Oyedele, L.O., Kusimo, H., Owolabi, H.A., Akanb, L.A., Ajayi, A.O.,
Akinade, O.O. and Delgado, J.M.D., 2019. Investigating profitability performance of
construction projects using big data: A project analytics approach. Journal of Building
Engineering, p.100850.
 Fisher, J.G. and Krumwiede, K., 2015. Product costing systems: finding the right
approach. Journal of Corporate Accounting & Finance, 26(4), pp.13-21.
 Haroun, A.E., 2015. Maintenance cost estimation: application of activity-based costing as
a fair estimate method. Journal of Quality in Maintenance Engineering, 21(3), pp.258-
270.
 Henri, J.F., Boiral, O. and Roy, M.J., 2016. Strategic cost management and performance:
The case of environmental costs. The British Accounting Review, 48(2), pp.269-282.
 Kamal, S., 2015. Historical evolution of management accounting. The cost and
management, 43(4), pp.12-19.
 Lopez-Valeiras, E., Gomez-Conde, J. and Naranjo-Gil, D., 2015. Sustainable innovation,
management accounting and control systems, and international
performance. Sustainability, 7(3), pp.3479-3492.
 Mendels, P., 2017. Building principal pipelines: A job that urban districts can do.
Perspective. Wallace Foundation.
 Mu, H., Jiang, P. and Leng, J., 2017. Costing-based coordination between mt-iPSS
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