Management Accounting report for Tech (UK) Limited
You have been working as an Apprentice/ Trainee Management Accountant at Tech (UK) Limited, who is producing special charger for mobile telephone and other carry-on gadgets for retail outlets in the UK. During the last senior management meeting, some department managers have complained about the lack of financial information to improve their decision making.
Your Line Manager who is the Director of Finance in Tech (UK) Limited has asked you to produce a written report as part of your learning which will also be circulated to all the department managers.
At the planned meeting, you have been asked to prepare a well-researched written report on the functions of Management Accounting systems.
Task 1
Your report should be in two parts covering;
a) Explanation of management accounting and the essential requirements of management accounting system which entails:
I. Distinguishing Management Accounting from Financial Accounting.
II. The importance of management accounting information as a decision making tool for department managers.
III. Cost accounting systems (actual, normal and standard costing)
IV. Inventory management systems
V. Job costing systems
b) Presenting financial information.
I. Different types of managerial accounting reports
II. Why it is important for the information to be presented in manner that must be
understandable.
[This will enable you to achieve P1 and P2]
Merit & Distinction: This task provides you with the opportunity to achieve Merit (M1) and Distinction (D1).
To achieve M1 you will need to evaluate the benefits of management accounting systems and their application within the context of Tech (UK) Limited.
To achieve D1 you will need to critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes.
Task 2
Tech (UK) Limited commenced business on 1 September 2010 producing special charger for mobile telephone and other carry-on gadgets, the cost card of which is as follows:
£
Direct labour 5.00
Direct material 8.00
Variable production overhead 2.00
Fixed Production Overhead 5.00
Standard Production cost = £20.00
The fixed production overhead figure has been calculated on the basis of a budgeted normal output of 36,000 units per annum. The fixed production overhead incurred in September was £15,000 each month.
Selling, distribution and administration expenses are:
Fixed £10,000 per month
Variable 15% of the sales value
The selling price per unit is £35 and the number of units produced and sold were:
September (Units)
Production 2,000
Sales 1,500
You are required to prepare income statements for the month of September using;
I. absorption costing and
II. marginal costing methods
Merit & Distinction: This task provides you with the opportunity to achieve Merit (M2) and Distinction (D2).
To achieve M2 you will need to accurately apply the techniques and reconcile the profits to produce appropriate financial reporting document.
To achieve D2 you will need to accurate apply and interpret the data for the business activities.
Task 3
In the senior management meeting it was discussed and agreed that department managers should have more involvement and take responsibility for their department budgets. This news was greeted with a welcome response, yet managers have requested for more information and training on using budgets for planning and control purposes.
Your line manager has requested you to provide a management report explaining the use of budgets for planning and control purposes.
In your report you should cover;
a) Different kinds of budgets and their advantages and disadvantages
b) The budget preparation process including determination of pricing and different costing systems that can be used.
c) The importance of budget as a tool for planning and control purposes. [This will enable you to achieve P4]
Merit & Distinction: This task provides you with the opportunity to achieve Merit (M3) and Distinction (D3).
To achieve M3 you will need to analyse the use of the different planning tools and their application for preparing and forecasting budgets
To achieve D3 you will need to evaluate how planning tools for accounting respond appropriately to solving financial problems to lead to sustainable success.
Task 4
Tech (UK) Limited has recently published their accounts for the last financial year showed a loss of £1.5 million. The company is evaluating ways in which the organisation could use management accounting to respond to financial problems. The auditors in their recent report has suggested the use of a Balanced Scorecard approach.
Required:
Referring to Tech's current financial situation, explain ways by which the Balanced Scorecard approach suggested by the auditors can be used to respond its financial problem and compare this approach to another management accounting approach used in another organisation of your choice. You must provide relevant financial information about the other organisation you have selected for comparison.
Merit & Distinction: This task provides you with the opportunity to achieve Merit (M4) and Distinction (D3).
To achieve M4 you will need to analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success.
To achieve D3 you will need to evaluate how planning tools for accounting respond appropriately to solving financial problems to lead to sustainable success.