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    (CHC33015) Management Accounting


    This project is all about discussing crucial information about management accounting which is more valuable concern for every organisation. It has been seen that managers of Zylla company is always in search of crucial aspects that are effective enough for the company to attain their aims and objectives those are being set for the future. It would guide them to take necessary actions regarding right options which will responsible for generating maximum profit for the company. This project is discussing vital matters those are related with types of management accounting and reporting system. Apart from this, to analyse total net profit for the company various costing methods is being taken into consideration. By the help of merits and demerits of using planning tools are equally responsible for attain future goals for an organisation. Although, comparison by using management accounting systems in respect to other industries to determine financial issues those are affecting the performance during the period of time. All information are analyse to reach a certain targets those are set of an organisation are discussed under this report (Figge and Hahn, 2013).

    Task 1

    P1: Explanation of management accounting and their essential needs in an organisation

    Nowadays, it has been seen that most of the companies are trying to make use of appropriate accounting systems those are responsible for recording valuable transaction those are incurred during a financial period. It is the primary responsibility of project managers to always search for all those aspects those is helpful or beneficial for an organisation to attain their aims and objectives in more effective manner. This can only be possible in case Zylla Company can make proper allocation of resources in right ways. Through this, they are related with achieving maximum earning with maximum selling of products and services (Thompson, Gilbert and Hernandez, 2012).

    Definition: As per the institute of IMA (Institute of management accountants: Management accounting is said to be an effective profession that consists of partnering in administration decision making, devising strategies and providing expertise financial reporting. This will be considering more reliable for an organisation to attain future aims and objectives those are set by Zylla company management team. This would aims of formulating management reports and statements that provide reliable and timely statistical data those are needed by managers to make every day as well as short term objectives.

    There are various types of significance of using management accounting systems:

    Effective decision making: It is said to be utmost important aspects for an organisation to attain future aims and objectives in case Zylla Company can make appropriate decision for future. All data will be essential enough to attain upcoming growth and sustainability through using resources in proper manner.

    Enhance productivity: Another important point is to be taken into account is related with production capability. It will be useful in increasing overall productivity of an organisation.

    There are different types of accounting systems which will be helpful for Zylla Company is mentioned underneath:

    Cost accounting system: It is said to be an effective framework that is being used by an organisation to predict the cost for their goods for the purpose of attaining profitability analysis. Estimation regarding reliable and accurate costs of products is effectively profitable in operations department of an organisation (Shah, Malik and Malik, 2011). There are various types of costs which are needed to be taken into consideration during the use of production process. It is consists of actual, standard and normal costing those are equally utilise in manufacturing of products.

    Inventory management system: It refers as utmost important accounting system which is useful to measure, track and analyse stock position of the company. All essential aspects those are associated with inventory maintaining and controlling of different stock those are being kept by an organisation during end of accounting period. There are various stock techniques that are related with them are FIFO and LIFO.

    Price optimisation system: It is essential tools which is used as numerical evaluation by an organisation in order to determine customers thinking and perception that what they will respond to various prices for all those products and services that are being offered by the company. This will be effectively reliable to examine prices that the company used to analyse will be more reliable to attain their objectives which is to increase operating profit for Zylla Company (Chang, 2013).

    Job costing system: It is known as effective system which is effectively associated with assigning production costs to an individual goods or group of products. Basically, job order costing is reliable in only that particular situation in which products produced are sufficiently different from one another. It has been seen that in case there are more than one job currently in progress, there is positive chances that costs will not assign in right manner. There are various costing systems those are related with an organisation. Some of them are standard costing, contract and process costing.

    P2: Different types of management accounting reporting system

    In accordance with making valuable outcomes from the available resources they need to consider all essential aspects those are reliable for an organisation. Report is more valuable assets for Zylla Company to analyse all financial account data that are being prepared by an organization during an accounting period of time. Management reporting refers to effective procedure that would provide crucial information to various levels of management so as to attain or give judging the effectiveness of all responsibility centres those are crucial base for taking valuable course of action in case it is necessary for an organisation. There are certain crucial matters with certain advantages and offering specific growth and financial stability in near future period of time (Groot and Selto, 2013). Submitting particular data for specific objective that relies upon certain demand of investors.

    This particular data would be more valuable form of report that consists of all essential data of Zylla Companies financial information. It is framed to attain all vital information about members of administration through providing accurate and timely results through use of resources in sufficient manner. Reports used to communicate data that has been complied as valuable outcomes of research and determine information and all necessary issues that are present in financial statements of an organisation (Justesen and Mouritsen, 2011). It would covers large range of matters, but mainly target on transmitting data with reliable objectives to draw attention of various people so that they can make valuable contribution by purchasing shares of the company. The nature and style of accounting report varies from large scale. There are various types of accounting techniques those helpful to record all data into their respective format. Some of them are mentioned underneath:

    Performance report: It is taken into account more specific raw data which is produced before any particular analysis. Once it has been determine that financial position of the company, it will be essential to make estimation of present performance. It becomes work performance data for consumption for some objectives such as to make appropriate decision making in near future. There are various tools which are more reliable to take into account past record so that actual outcomes can be managed in effective manner.

    Account receivable report: According to this particular report that is being prepared by an organisation to in respect to determine all lists of customers unpaid invoices and credit memos. By using this, company would be easily be able to determine the exact time period for recovering total amount which remain overdue from debtors side. It is taken into account as one of the most reliable and easiest method for analysing the position of the company’s total account payable or receivable (Harris and Durden, 2012).

    Inventory management report: As per this particular report accountant can easily be able to determine all necessary techniques or list of stock that Zylla Company has kept with them. This would provide the stock age which determine their receipts data. In case all the receipts date information is lost, the inventory cannot be ascertain or classified in essential manner. All operating and closing stock positions that are being necessary to examine total level a stock can be last.

    Job cost report: It is known as initial place for total data which consists in other reports of an organisation. As per this report each job a company is operating on and lists the total costs which are incurred on an individual job in last period are taken into account. It can also be divided into various parts such as labour costs, material and overhead costs. There are specific documents that are being used to record producing costs and prepared through company that are related with job costing system during the calculation as well as allocation of costs to an individual products and groups at the same period of time (Amoako, 2013).

    M1: Benefits of management accounting system

    In every business organisation, it has been seen that are managers used to search an appropriate accounting systems that are reliable enough to attain future aims and objectives in more effective manner. All the above discussed accounting systems are equally responsible which would be helpful to manage the financial transactions those are being done in an accounting period of time. Such as cost accounting is which is related with increase future estimated cost and expenses those are incur by Zylla company. Whereas inventory management system is use control and keep track of stock position within an organisation.

    D1: Critical evaluation of accounting reporting system

    In respect to get more reliable solution to a given statements. The best ways is to make proper evaluation of financial position. This will assist them to determine current performance and easy for investors to make their crucial investment decision. The chain of activities consists of creation, manufacture and distribution of firms a company used to produced during the period of time. Some of them are performance report that are prepared to analyse performance of the company on the basis of actual and standard data. While account receivable report can used to determine total lists of unpaid customers those are still remain overdue.

    Task 2

    P3: Various costing methods used to calculate net profit for the company

    Cost is considering more essential aspects for an organisation. It is vital for Zylla company to record every costs those are incurred in a business in the manner which can be used to improve their management performances. Cost accounting is said to be systematic process of recording, categorising and allocating various alternative action for the purpose of controlling costs for an organisation. There primary motive is to advice the management on the most appropriate course of aspects those are based on the cost efficiency and capability of an organisation. It is directly or indirectly associated with the production of products and services that are done by the company during an accounting period (Brewer, Sorensen and Stout, 2014). There are various types of costing methods those are being taken into consideration in respect to evaluated total net profit for the company. Some of them are discussed underneath:

    Absorption costing: It is known as one of the best suitable methods which are related with all production process. This seems to be full costing which take into account fixed and variable cost with the production process and apportioning to an individual products (Absorption costing, 2018). Hence, a product must be associated with wide range of costs that are done in a manufacturing process. Costs that are operate in production of facilities that does not vary with the extra production of products units. Some crucial examples are rent and insurances.

    Marginal costing: It is an effective accounting systems which is used by Zylla company in production of additional unit produced. This concept is used to determine the maximum manufacture quantity for extra units. It consists of only variable cost and fixed costs are units and fixed costs of period are written off in full against the total contribution during an accounting period of time.


    Marginal costing

    Absorption costing

    It used to consider only variable costs that are taken into account for product and inventory valuations.

    In this, variable and fixed costs both are taken into consideration of product and stock valuation at the same point of time.

    In this fixed costs are regarded as period costs. The overall profitability of various product can be determine by using P/V ratios.

    Here, fixed costs are charged to the cost of manufacturing. Each product bears a reasonable share of fixed costs.

    Calculation through marginal costing using Income statements



    Sales 35*500




    Production cost 6+5+2 - 7800


    Closing stock: 100*13 - 1300






    Variable sales overhead 500*1 500


    Fixed overhead -1800


    Selling and administrative cost expenses (800+400) -1200


    Total Profit / Loss


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    Computation of Net profit by using absorption costing

    Income statements



    Sales 35*500




    Production cost 6+5+2+3 = 16*500 8000


    Gross profit




    Variable sales overhead 500*1 500


    Selling and administrative cost expenses (800+400) 1200


    Total Profit / Loss


    M2: Analysis of accounting tools and techniques

    It has been determine that every business such as Zylla company required to have effective planning option by which they can analyse their future aims and objectives in impressive manner. There are various types of accounting tools which are helpful to attain maximum profit and growth in coming period of time. It is an effective planning process for managers to get their set outcomes. In accordance with this, financial statement analysis is done to analyse present position of the company as compare to other one. Standard costing is responsible to make comparison of actual outcomes that are generated during the time.

    D2: Analysis of income statements

    According to the above calculations which are done by taken into account both marginal as absorption costing. By using them company is getting various results at the same level of production process. The outcomes are more positively reflects the growth position of Zylla company. By using marginal cost they are responsible for getting profit of 7500, whereas with absorption costing they are getting 7800 of total gains. The difference of 300 is arising because of fixed cost treatment. It means that in order to make better outcomes in near future time, marginal costing is taken into accounts for future decision-making.

    Task 3

    P4: Merits and demerits of various planning tools used in budgetary control

    Budget is an effective financial plan for certain period of time which is mainly for future period. It can also consist of planned sales, volumes and earning incurred by the company during the period of time. A budget is predicated the financial outcomes of Zylla company for one or more periods. It is said to be an effective planned and systematic gathering of records for a particular period of time (Lim, 2011). This seems to be framework of operations and estimated vision and mission of an organization targets. Budgetary control is said to be an effective tools and techniques which is being related with planning, organising and controlling performances of an organisation. In this actual earnings and overall spending are determine with planning incomes. There are various types of planning tools which are helpful for an organisation to control implications of an organisation. Some of them are discussed underneath:

    Forecasting tools: It is known as one of the vital assumption which is to be done on internal level of an organisation that consists of effective ability which is done for making effective decision-making. It is mostly depend on historical data for the aims estimation future profitability for an organisation. Future values of growth process that are used for the selected period of time. The more accurately a company can estimate internal and external factors affecting internal business performance of an organisation.

    Advantages: Every organisation uses a wide variety of forecasting techniques to assess best possible results for the company. It is mostly relies on an individual performances and industry in which they operates.

    Disadvantages: It is not taken as best possible aspect that is accurately estimated for future. Because of qualitative scope of estimation a business can come up various situations that depend upon the data interpretation.

    Scenario analysis: From various planning tools a managers can use for effective planning, situation strategies which stands out for their ability to collect a wide range of possibility in effective manner. Through determining basic trends and uncertainties, managers can estimate a wide series of situations that will assist them to help for analysing errors those are arises in an organisation (Van der Stede, 2015).

    • Advantages: It has been seen that decision formulators uses as data to take better understanding of information that are able to reorganise a situation in their early stages which is actually unfold.
    • Disadvantages: The major limitation of using these tools is that the early warning of risk and decision support system is not controlled.

    Contingency Tool: This seems to be an appropriate planning tool which is devised for a valuable result other than usual strategies. It is mainly used to measure all risk administration in case an exceptional risk that are most unlikely estimated to be occurs. It is mostly devised through governments and other business forms. It is mostly prepared for all such events such as loss of information, customer and suppliers data and so on.

    • Advantages: An effective documented plan that allows employees to change rapidly in case of advance mode rather than ready for instructions. Chances of minimum damages can be controlled early.
    • Disadvantage: The major limitation of these planning tools is related with inadequate literature. Henceforth, it is not reliable to provide various types of actions which can be taken into account under a given situations.

    M3: Analysis of planning tools and their application

    In accordance with all crucial aspects which are helpful for increasing the reputation of Zylla company. It is necessary to make use of effective planning tools in more reliable manner. Maximum targets can be taken over on proper utilisation of resources by using appropriate planning tools and techniques. Some of them are forecasting tools which will be reliable for the company to estimate future costs and expenses that are arises in an organisation. While contingency tools can provide valuable data for risk management of the company.

    Task 4

    P5: Different measure to overcome financial problems

    There are many issues are arise in the organisation which have direct impact upon their capability regarding earning of the adequate amount of profits. The different issues which are noticed within Zyalla includes low quality of products, lack of skills among workers etc. which has negative impact upon the profitability of organisation. There are various kinds of financial issues those are present in an organization. Some of them are mentioned underneath:

    Profit level: It is said to be utmost important aspect for Zylla Company but without selling maximum products they cannot be able to generated sufficient amount of gain in near future time. This seems to be major concern for an organization to maintain definite level of earnings in near future time (Lavia López and Hiebl, 2014).

    Product and service quality: Another important issue found in an organization is associated with product and services delivery to their customers. It has been noticed that plenty of problems are mostly arises because of not satisfactory products offered by the company to their customers.

    Budgeting issues: The other crucial issue related with finance is associated with budget preparation done by an organization. In case the company cannot be able to make reliable and accurate budget then they need to deal with various issues those are directly affecting profitability for an organization.

    Management accounting plays an important role to overcome from such financial issues through use of different tools. The different aspects provides the opportunity to respond such financial issues are defined below:

    KPI: It is refers as key performance indicator which helps to assess the actual performance and development of the appropriate solution to improve their performances. This can be of two types which are known as financial and non financial. Financial KPI includes income statement which helps to improve financial performance. On the other hand, non financial KPI helps to improve the coordination among the employees to provide their best regarding accomplishment of desired objectives.

    Benchmarking: This method provides the opportunity regarding establishment of standards which are required to adhere while performing their functions. This helps to remove their issues and build good organisational structure.

    Financial governance: This method helps to follow all the regulations which are provided by the government of different nations. It helps to prevent themselves from penalties and fines and improves their brand image in market through which they can earn large number of profits.

    Zylla Company

    Rowlinson Knitwear

    KPI tool is used to improve financial and non financial performance

    SMART objectives are used to provide direction to employees

    Benchmarking contributes to perform the functions as per standards

    Financial governance is used to fulfil different regulatory requirements.

    M4: Evaluation of financial issues

    In respect to get more reliable outcomes in near future for Zylla Company, they need to make examination of various financial issues those are affecting profitability of an organisation. Some of them are associated with profit generated during the time as, it cannot be sufficient helpful to meet out their demand of the customer as well as stakeholders. Some of them are related with product and services level. All of these are equally responsible for making huge impacts on the growth and stability at the same period of time.

    D3: Critical analysis of various financial problems

    It has been found that there are various accounting issues are present in an organisation which is affecting profitability as well as financial stability equally. This can be removing by using appropriate financial tools and techniques. Such as key performance indicators which are held responsible for making comparison among actual and standard outcomes generated by Zylla Company during an accounting period of time. While some are related with financial governances that consists of various rules and regulations.


    From the above project report, it has been articulated that management is always satisfied in case they are having effective management accounting systems which is responsible for recording financial transactions in proper manner. This project guide accurate use of accounting and reporting systems so that investors can be make profitable decision in near future. With the use of coating techniques company can easily be able to determine total net profit they are getting in one year. Apart from this, merits and demerits of using planning tools can assist them to get more sustainable attainment in coming period of time.


    • Figge, F. and Hahn, T., 2013. Value drivers of corporate eco-efficiency: Management accounting information for the efficient use of environmental resources.Management Accounting Research.24(4). pp.387-400
    • Thompson, J. B., Gilbert, J. M. and Hernandez, J. T., BENEFIT RESOURCE Inc, 2012.Benefit management system and method. U.S. Patent 8,234,222.
    • Shah, H., Malik, A. and Malik, M. S., 2011. Strategic Management Accounting-A Messiah For Management Accounting?.Australian Journal of Business and Management Research. 1(4). p.1.

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