Management Accounting Report: Zylla Corporation Analysis and Insights

This report provides a comprehensive analysis of management accounting practices within Zylla Corporation, a multinational organization undergoing restructuring and expansion. The report delves into the core concepts of management accounting, including cost accounting, price optimization, job costing, and inventory management systems, highlighting their application in a business context. It examines various management accounting reports, such as budget reports, accounts receivable aging reports, and cost reports, and how they aid in financial decision-making. The report also explores the techniques of cost analysis, specifically marginal costing and absorption costing, presenting income statements prepared using both methods. Furthermore, it discusses the advantages and disadvantages of different budgetary control tools and compares Zylla's approach to financial problem-solving with that of other organizations. The analysis emphasizes the integration of management accounting systems and reporting with organizational processes, providing valuable insights into financial management and business development.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1Management accounting and its essential requirement in reference to selected
organisation......................................................................................................................................1
TASK 2Techniques of cost analysis to prepare income statement through marginal costing and
absorption costing............................................................................................................................4
TASK 3Advantage and disadvantage of different planning tools of budgetary control..................7
TASK 4Compare of organisations for respond to financial problems............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is the process of identifying, analysing, recording and presenting
financial information to their management. Through financial information manager can conduct
various activities like plan, decision making and operational control (Management accounting,
2019). With the help of management accounting one can get an answer of typical questions and
bring maximum revenues, increase in the labour wage and set initial retail price of new product.
On the basis of financial information, internal management system can predict the future and
evolve short and long term policies. To understand the concept of particular report selected
company is Zylla. It is a large multinational organisation, which has under gone a number of
changes over some time. As a result of spread into new market and locations, restructuring and
acquisition. This report consists of management accounting and management accounting system.
Apart from techniques of management accounting to analysis the cost and different planning
tools for budgetary control. In addition, response to financial problems after using management
accounting and comparison with another organisation to find out solution in effective manner.
TASK 1Management accounting and its essential requirement in reference to
selected organisation
Management accounting is also known as managerial accounting and cost accounting.
The process of managerial accounting determine business costs and operations to develop
internal financial report, accounts and records which can be presented in front of manager who
can use these to decision making process as well as in planning. In different words, it is the act of
making sense of financial and costing data and translating that data into useful information for
management and officers in reference a company (Andon, Baxter and Chua, 2015).
There are several types of management accounting systems which can coordinate with
process of organisation related to Zylla company. There has been mentioned different types
management accounting system -
Cost Accounting system – The system is a framework used by firms to determine the cost
of their products in reference to profitability analysis, inventory valuation and cost control. This
system consists of inventory and cost control. It is difficult to predict cost of different products to
conduct profitable operation. It is an accounting system which is designed for manufacturers that
tracks the flow of inventory continually with the help of various stages of production. In
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reference to Zylla company can multinational company so manage cost of all products in
effective manner apply cost accounting system.
Price optimising system – The particular system has been used to set the price of
different manufacturing goods. Price optimising system used to identify the prices of different
products in particular time period. With the help of this analysis of demand of their products and
know perception of customer regarding to different level of prices of their product. After that set
price of their product and provide help to set price structure to promote pricing, discount pricing
and initial pricing. There are considering several element like product life cycle, collection goals
and competitors pricing strategies before deciding the prices of the different products.
Job costing system – The particular system has been used to evaluate manufacturing cost
of each product in an organisation. It can help to track and monitor of the cost of each job in
effective manner. Zylla has been used this system in order to track expenses of their products and
there are including different types of information in reference to zylla company -
 Direct Materials – Through job costing system track the cost of material to identify
scrapped during to job. There has been complied cost with the help of tracking of
materials on cost sheets (Aryee and et.al., 2015).
 Direct Labour – With the help of this system track the amount of labour which is used in
job and these are related to different services. It is mainly related to time card, time sheet
that is set according to clock application on computer.
 Overhead – The system has been assigned to one or more cost pools and in the end of
accounting period, the total amount of each cost pool from several open jobs which is
based on the allotment methodology.
The particular system has been required for the Zylla company because it can provide
detailed information regarding to direct material, direct labour and overhead.
Inventory management system – This system can track goods at each level of
manufacturing and covers everything like production to retail, warehousing to shipping and all
the movements of stock and parts. Zylla company is expanding their business to restructure
itself. So for new company it needs to manage all inventories in effective manner as per the
requirement on customer basis. To manage inventory, company have different methods these are
LIFO, FIFO and AVCO but Zylla has been selected FIFO method because in this method First in
first out because it can help achieve growth easily and help to maintain inventory long time. It
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means which material received in starting that has been taken quickly for sale out first. Different
method used for management accounting reporting
There are mentioned several management accounting reports which can help the
management to produce appropriate management reports in order to predict for make critical
business decisions (Managerial accounting reports, 2019). Through these reports the manager of
zylla can provide accurate and authentic information and statical. There are mentioned different
types of management accounting report which have been prepared by finance manager of Zylla
company -
Budget Reports – Budget managerial accounting reports are using to analyse the
performance of the business and manager to control their cost. Through these, budget can
estimate the income and expenses of particular department. In reference to Zylla company,
manager cannot determine the performance because it is new restructuring company and this
particular location they have nor past experience. There are evaluating performance of other
branch in order to estimate income and expenses by manager.
Accounts receivable agin report – It is a critical report which can use to manage cash
flow in order to extend credit of customers for their business. Most of the agin report can include
as separate columns for invoice like 30 days, 60 days and 90 days. The report can provide help to
manger to find out the problem regarding to collection process. In the reference of the Zylla
company, every report has been prepared on starting basis because at new location they have not
past experience but in reference to exists products they have to contact old clients. So regarding
to them start exist problems. So there are mentioned those problems and find out their solution.
Inventory and manufacturing reports – In the particular report mention information
about labour cost, wastage concerned, per unit overhead and used material. It can provide all
detailed information about manufacturing stage and used inventory at each stage (Ashraf and
Uddin, 2015). In the reference of Zylla company for new restructuring business they have to
prepare report which type of products they have to manufacturing and which type items can
include for sale out.
Cost managerial accounting report – Through managerial accounting measure the costs
of articles which is manufacturing. There are covering all types raw material, labour and
overhead. The total amounts of these aspects can be divided by produced products and the
particular cost report can offer the capacity of managers to realize the cost of different items
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versus their selling prices. In the reference of Zylla company, With the help of this report predict
and monitor selling price as well as profit margin. There are monitoring the cost of each product
and analyse market trends in reference to products and services. Benefits of management
accounting system and their application
Inventory management system – Through this system can manage all types of material in
every stage of the manufacturing and help to reduce wastage. In context to Zylla, use this system
to achieve effective cost of their material.
Cost accounting system – it can help to know low frequency of the client and reduce to
selling price of services. As per the scenario of zylla has been measuring efficiency through this
system and perform their business in effective manner.
Job costing system – The system has been provided all basic information regarding to
direct labour, cost and overhead. In the context of zylla company determine of future pricing
strategies with the help of this system.
Price optimization system – The particular system can help to know different perception
of customer and set price structure of different products. In the scenario of zylla has been
analysis the market after that set prices of their product at new location. Critical analysing of
how management accounting system and management accounting reporting are integrated with
organisational process
With the help of management accounting system and management accounting reports are
used in organisational process because it is related to different departments. It can present to
business activities and manage all aspects in effective manner. Price optimization system can set
price structure of the products while cost accounting reports can provide cost of different
products. Through inventory management system track all material each stage while inventory
report keep all information regarding to material (Gow, Larcker and Reiss, 2016).
TASK 2Techniques of cost analysis to prepare income statement through
marginal costing and absorption costing
Cost – It is indicate as monetary value that a company has spent to manufacture
something and cost spends at the time creation or manufacturing of goods or services.
Marginal costing – It is a technique where in the marginal cost includes variable cost and
fixed cost. In variable cost represents as charged to unit of cost and fixed cost represent as
written off against off the contribution.
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Absorption costing – It takes into consideration of all resources and expenses which is
related to cost of production and these are treated as cost of production. In absorption costing, a
part indicate of fixed overhead that is allocated of each unit that is related to manufacturing cost.
Income statement by marginal costing method
May June
Selling Price 50 15000 25000
Less: Marginal Costs
Direct materials per unit 8 2400 3040
Direct labour per unit 5 2500 1900
Variable production overheads per unit 3 1500 1140
Total 6400 6080
Less: Opening inventory - 3200
Add: Closing Inventory 3200 1280
Gross Profit 11800 17000
Less: Fixed Costs
Fixed selling expenses 4000 4000
Fixed admin expenses 2000 2000
Fixed Production cost 4000 4000
Less: Sales commission 750 1250
Net Profit 1050 5750
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Income statement by absorption costing method
May June
Selling Price 50 15000 25000
Less: Absorption Costs
Direct materials per unit 8 4000 3040
Direct labour per unit 5 2500 1900
Variable production overheads per unit 3 1500 1140
Fixed Production cost 10 3000 3800
Total 11000 9880
Less: Opening inventory - 5200
Add: Closing Inventory 5200 2080
Gross Profit 9200 17200
Less: Fixed Costs
Fixed selling expenses 4000 4000
Fixed admin expenses 2000 2000
Less: Sales commission 750 1250
Net Profit -550 6150
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There are defined various types of management accounting technique to analysis the
performance of the company. It can provide accurate position, these are -
 Financial planning – It is a plan which is related to decision policy and defined about the
various sources of money. It is major technique because through this planning arrange all
planning and it is applying in Zylla company.
 Historical Planning – Through this get all historical data in order to arrange financial
information. In the context of Zylla focus on the management method and help in
decision making process. Interpret data for a range of business activities regarding to
financial report
Today financial report major part of any organisation because it is related to every
organisation and it can present performance of the business. In the financial report include of
balance sheet, income statement and cash flow. Through these report analysing the performance
and present all detailed financial information (Järvenpää and Länsiluoto, 2016).
TASK 3Advantage and disadvantage of different planning tools of budgetary
control.
Budgetary control is a kind of technique in which managers of any company determines
the financial and non financial goals which becomes basis for evaluation. This is why because
with the help of these determined goals companies compares the actual performance with these.
The Zylla company, use the different planning tools of budgetary control which are mentioned
below:
Zero based budget- It is a kind of budget that is prepared without considering past
budgets information. Eventually, this budget starts from zero level in which each activity has its
justification. These types of budgets provides accurate result with lower possibility of errors. The
above company can use this budget for those activities which are important for them. Herein
some advantages and disadvantages of this budget are mentioned below:
Advantages
ZBB has many advantages like this budget emphasis on effective use of resources so that
organisation can get maximum benefits. As well as these types of budgets are accurate and fair
because in this each activity has its own justification. If above mentioned company will use this
budget, then it would be beneficial for them to use all the resources effectively and their financial
activities will be fair (Leotta, Rizza and Ruggeri, 2017).
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Disadvantage
The main disadvantage of this budget is that it takes too much time in the preparation as
well as it consumes too much cost and time. Apart from it, the ZBB requires detailed knowledge
about the budgets. In the absence of proper knowledge, it will be difficult to make this budget.
The Zylla company faces these issues when they implement this budget.
Operational budget - A detailed projection of all estimated income and expenses has
been related to predicted sales revenue during a particular period of time (Luft, 2016). it is
mainly related to various sub budgets. There are most important thing that sales budget which is
developed first. With the help of operational budget prepare short term budget, capital outlays
but there are excluded long term costs.
Advantages
The key advantage of this budget is that it provides the facility to make change in the
budget whenever user wants to change. If Zylla company implements this budget, then it would
be beneficial for them to make needed changes. It would help to variance analysis and in
scenario planning.
Disadvantages
The main disadvantage of this budget is that its information can easily be manipulated by
the lower performer employees. As well as company can hide their actual performance from
stakeholders by making changes in the standards.
Capital budget – In this type of budget collect all type information related to net present
value, IRR, Pay back period and ARR. Through this budget apply different method to calculate
capital of the Zylla company. It has some advantages and disadvantages which are mentioned
below:
Advantages
The capital budget does not require any update in entire budgeted time period due to this
company can focus on important activities. As well as it is suitable for long time period activities
for Zylla company. Herein, the above company can use this budget for those activities which will
not change in budgeted time (Massaro, Dumay and Garlatti, 2015).
Disadvantage
This budget has some disadvantages because users of this budget can not change in it.
Due to this, it becomes difficult for companies to update the budget if any huge change occur in
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sales or other term. The Zylla company can face this issue if they adopt this budget and any
change incurs in that time period. Use of different planing tools and their application
It has been determined that in each company using different types of planning tools
which can related to upcoming performance of the company. There are company has been
followed different planning tool like zero based budget, flexible budget and static budget.
Through these tool control business activities and provide help in decision making process. In
reference to Zylla applying these financial tool for identify all problems which can face in future.
Through zero based budget know all weakness of an organisation and try to reduce for future. In
further flexible budget can provide flexibility and time to time change budget as per situation.
With the help of static budget estimate about the long time period.
TASK 4Compare of organisations for respond to financial problems
Financial Problem – It is a situation that will create any time in the business due to
money worries are causing of stress. Due to financial problem many people can face difficult
time and it can influence to mental health. It become reason of not able to acquire of appropriate
results and objectives. In reference to Zylla company can try to overcome these problems and
here is mentioned financial problem of the company -
 Lack of money management – In every organisation need to manage money in effective
manner so for this nee to prepare strategy and proper planning. These strategy have to
manage all monetary system and continue monitor of all activities. In the scenario of
Zylla company in starting origin problem of money management because in starting they
can not get how to spend and how to save in organisation (O'Dwyer and Unerman, 2016)(
Sohn, 2016).
 Spending more than earning – There is need to estimating about expenses in reference to
potential time period so it will create a problem. In the context of Zylla company
company to establish their branch in effective manner to focus to build their image so that
time spending more than earning. It is not good because they can face much more loss so
they have to prepare strategy as per requirement.
Management accounting approach – These approaches can use by companies as
accounting techniques to sort out of financial problems of an organisation. There are mentioned
about the accounting techniques in references to identify different type of financial problems
these are -
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1. KPI – Key performance indicator can use as metrics that can use by corporate executives
to track performance of the company in subject to financial and non financial way. KPI
can focus on the success and functions of the business in efficient manner and it used as
business tool in order to track different types of factors. In reference to Zylla company
apply KPI tool to identify the financial problems of lack of money management.
2. Benchmarking – This tool can apply by an organization to get minimum expect result. It
means the particular company has been compared performance with other company and
identify problems. With the help of benchmarking improve performance of company in
efficient manner. The Zylla company apply this tool to compare performance of their
company with other company to recognise the problem of spending more than earning.
3. Financial Governance – It is a financial tool which can use to solve problems that is
identify through KPI and benchmarking. Financial governance can collect information,
manage and control their financial information. To reduce the problem of lack of money
management monitor of all activities and record all transaction and for spending more
than earning, predict potential income and expenses to prepare strategies to control
money (Uyar and Kuzey, 2016).
Zylla company Aroma company
Problem – In the company identify financial
problem which is spending more than earning
due to build up their good image in the market.
The particular company has faced problem
regarding to lack of maintain accounting
reports and does not apply proper theories.
Approach – To solve the above problem
company has been applied KPI because
through this financial tool different aspects can
be categorised into financial and non financial
indicators.
To sort out of this problem company have to
applied Benchmarking because there are
compare performance with other company.
System – The company has been followed cost
accounting system to prepare cost structure and
maintain accounting system to sort out the
problem of spending more than earning
(Tucker and Parker, 2015).
There are company applying price optimization
system to know price of each product and
according to that maintain all records of
accounting in a company. It can help to reduce
problem lack of maintain records and books.
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Management accounting can lead organisations to sustainable success
Through management accounting a company can get sustainable success in reference to
sort out of financial issues in effective manner. In the scenario of Zylla company has been
applied KPI and benchmarking in order to identify origin financial problems. It will create
problem for an organisation regarding to growth and success. There are with the help of KPI
know about the financial and non financial indicator to analysis the problem regarding to
performance. In benchmarking through company wants to get minimum expected result so for
this company performance with other company. Through these financial tool identify financial
issues and sort out to gain sustainable success in an organisation. Planning tools for accounting
to respond to solving financial problems
It is important to sort out financial problems through different planning tools. These tools
are estimate about the future expenses and income. On the basis of these aspects know about the
financial problems. The Zylla company can apply different planning tool like static budget,
flexible budget and zero based budget. Through these budget can reduce the problems of an
organisation and get sustainable success (Spraakman and et.al 2015) .
CONCLUSION
As per the above mentioned report it has been concluded that, in present time
management accounting become major part of any organisation and their system can be
implemented in effective manner. These system can depend on the scenario of a business and
also prepare management accounting reports to defined how to handle different departments
through these reports. To calculate the cost of company apply marginal costing and adsorption
costing to know net profit of the company. To estimate business apply different planning tools
and they are working in effective manner. There are various financial tool which can identify
financial problem and sort out to over come.
It is understand through congruence model where include strategy, work, values, people & skills
and organisation & culture. There are applied different techniques which can help in team
performance targets like balance scorecard board, MTR, MBTI and Mckinsey. Through these
tools measure performance every team member in effective manner. It is required to analysis of
performance targets against current performance. To accomplish of strategic objectives address
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the need of individual commitment and defined application of delegation, mentoring, coaching as
well as strategic objectives. There are utilised different types of methodologies and categorised
into performance effective, attitudinal and behavioural.
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