Unit 4 Management Accounting Assignment Level 3


In today's scenario the competition is increasing at huge level and every industry do require to have an management accounting in effective way, so that firms can make an proper decision and product an strategy for the development of there company and can fight up with cut throat competition in better way. Even though, it also help in maintaining the day to day transaction (Garrison and et. al., 2010). Basically, entity also uses advanced technology for coming up with proper solution to the risks and problems associated with financial accounting. The written report is based on the Tech UK which is serving million of people with the phones, special charger of cell phone and gadgets etc.

Assignment will discuss about, comparison in between financial and management accounting and its significance by specifying management accounting. Different accounting report and there significance with marginal and absorption costing etc. Apart from having an budget with an pros and cons with its value as well.

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P1 Management accounting and its systems.

a.) Management Accounting and financial accounting with difference in between.


Financial Accounting

Management Accounting


It is that which leads to classify, analyse and also record variety of components and also have in form of concise manner with financial affairs with entity in proper way.

Management Accounting is that which is considered as producing effective decision and strategies for Tech UK limited.


Financial accounting is as which shows maximum accuracy in proper way and also having an picture of various financial affairs too in great way.

Management Accounting is thus which do make an staff by having an meaningful steps and various strategies too.


Even though the Financial Accounting is that which is being prepared as per GAAP and IFRS in great way.

Management Accounting is that which do follow some of the rules and regulation in proper way.


Financial accounting never gets depending on management accounting in great manner.

Management Accounting is that which take an help from the financial accounting to have some right decisions in proper way.

b.) Importance of management Accounting information for having an decision making.

Management Accounting information is such which help company to produce an effective decisions and strategy. It also help company to use the finance in better way. Some of the importance of same are as:

  • This is such which help in determining the carrying out metrics for the different department in great manner as well.
  • Management Accounting is that which leads to analyse the effective variations that also look forward to provide some accurate solutions and in corrective measures in proper manner as well.
  • Collecting genuine data and compare it having report in between the some of indicators with current performance that also have an expectation with business.
  • Management Accounting also has advanced tools and the techniques that has an key performance indicators and also having an balance scorecard with future plan and it is done regards to management system too.

c.) The different accounting cost system is that which also include the various cost and also has some of those are as:

  • Actual cost: It is that which leads to have an actual expense which is made in acquiring an asset, it is such that include supplier and having an invoice expenses with aid to cost of delivery and also lead to test asset (Fullerton, Kennedy and Widener, 2014). It is considered and recorded as financial statement which is fixed asset.
  • Standard costing: This is that which Substitute the cost for having an actual one in having an accounting record that has an periodic variance which also shows an difference in between expected and actual cost too. Normally, it contain simplified alternative system as FIFO and LIFO method as well. Even though, it is having an large number of cost information in which maintenance of items are there.
  • Normal Cost: Normal cost needs to provide some of value and leads to have produced product with the accurate cost and includes the direct labour cost which also manufacture with the predetermined overhead rate as well in better manner. Therefore, cost is considered with to product cost and it is quite used for cost of goods sold in effective way.

d.) Inventory management system:

Inventory management system is such that needs to be considered as transferring an product and services of firm from one place to another. (Dillard and Roslender, 2011). Entity is that which also handle stocks on regular basis that having an place that also leads to have an order for product and deliver commodities to different customer. Basically, it is there which needs to be identified to have an determination of inventory of product which do help in meeting up the needs and desires of consumer that get satisfied in better way. Basically, there variety of stock valuation techniques which is needed to follow while performing at the time of performing in better way:

  • FIFO:- In Organisation, actual flow of materials are there which needs to follow some of the method and having an accounting legal selection as well. There are no use of GAAP restrictions on use of FIFO and having at reporting at financial outcomes too.
  • LIFO: In certain business, earlier product were used to kept in with inventory. The IRS use this concept sometimes but as subsidiary.
  • AVCO: Moreover it is required to have periodic and inventory system and they also uses different techniques and tools in firm. Hence, various similar cost is there and having an average method too and required to analyse total value with ending stock and cost of sales in better way.

e.) Job Costing system.

It is that method of accounting which needs to be determined by cost that is occurred in having an development of jobs with which firm is earning an huge income and profits in effective way. Moreover, situation has different needs and things are there that also help in collecting information and data which is somewhere related with the expenses in income of same too. Hence, there are various costing system and some of those are as:

  • Batch Costing: It is an effective particular order costing. Basically in this batch marked areas were there and has identical unit and they came to separate from one another.
  • Contract Costing: It is needed to use flow of cost which is somewhere associated with a particular individual as well. For instance, company is having an bid wide construction projects which is considered as prospective customers in great way.
  • Service costing: it is that which considered as operating cost in which firm do provide services in with accordance to in production in with during the time too.

P2 Information of finance.

a.) Type of management accounting reporting.

Various method is there which is being used in production of the managerial reporting in accurate way. Report are those which do include things like budget and the job cost etc. It is quite like collecting information that is related with the finance and non-finance data which may do help in handling the performance of the firm in great way. Some of them are as:

  • Budget: Budget is that which is prepared in better manner as because it involves expenses with incurred in earlier years as well in right context. Moreover, budget is that which do help in having an execution of performance in various department. (Cinquini and Tenucci, 2010). Budget report is somewhere help in mainly with control expense and wastages that also sometime occur in with between the process that may help in looking forward which do help in reduction of some of the operational cost and such it is be like themselves that lead to attain the goals and objective too.
  • Exception report: It is considered as abnormal cost that might include the outside rage of particular thing of range. Basically reports are those which are strictly prohibited without having any type of permission from owners too.
  • Demand report: It is that report which is pre-planned and it also needs to formulate requirement of some interested parties and performed in great way. Even though it can be seen that demand for the course can be there and concluded according to scheduler it is pre-recorded under this report as well.
  • Inventory: Inventory does consider the reports and also consider production of product in Tech UK. Normally the report is such which do help in managing raw materials and also lead to somewhere that help in finished goods in effective way. Basically, it such which help company to produce product and services according to the requirement of people and customer which also lead in allocation of resources in proper way. Minimising labour cost and overhead cost can help firm in there working too.
  • Account receivable: Accounting is that which do help in handling and monitor debtors in better way. Moreover, it is included merely as effective and proper tool which leads to use the firm and also handle flow in better way (Christ and Burritt, 2013). So it will include the decision and strategy which is regarding to credit with customer. This does make them to keep in mind about having an different number of debtors that also create proper and better policies with procedures in appropriate way.
  • Job Cost: Report should be made by staff and it is such which also needed to identify the different expenses which is going to occur at the time of having an implementation of task and activity. It is like matching up variety of expenses with assumed income too. Moreover, it does make firm to attain its goals and objectives in right context and earns higher income with profit as well. Normally, contributing the cost with the time for firm needs to lead and help him in minimising the operation and having an worth of it in correct way.

There are some importance of these report system for entity that do help in performing the better way, so that firm is such which can help in attaining the goals and objectives in perfect way.

Reduced cost: Data and information is such that management of firm which lead to assume some of the future issues and it also make an proper plans for having an purpose of ignoring the different issues or problems as quickly as possible in proper way as well (Baldvinsdottir, Mitchell and Nørreklit, 2010). Basically, it do help in having an reduction with cost of productions that has an process of various quality product which is affordable at reasonable prices too.

Decision making: Information is that which do lead with finance and non-finance criteria which do make them in knowing various accurate problem of money and they do take some of the important necessary steps that has an execution of different business task which is done according to it only. Basically, management do formulate an planning, performance management and also having an risk which also gain an productivity too.

Increase financial return: Procedure are those which is being implemented, even though it is such which was required by following an management of entity too. Moreover, it is such which required to conduct the program in better manner as employees are those which lead to perform employees as to perform something in better way which has an possible outcomes in near future too.


P3 Income statement using the operation and marginal costing.

Cost: Cost is that which incur by making an investment of finance in the production sector that also produces some of the quality product and services for customers. Determining some cost that also lead to have an incur with at few of the steps of process that do sell quality product to ultimate customer in perfect way too.

Marginal costing: It is that which is invested in manufacturing part on the extra unit of production of product with the variable resources in better way (Macintosh and Quattrone, 2010). Basically, at some time calculation is having an marginal cost which do lead in having an variable cost and it is taken into accounts as it is that which do exclude some fixed expense. Moreover, costing is also mainly used in company with maximal number of entity that do help in earning huge profitability in better way.

Absorption costing: It is such method for having an aim of such calculation of accurate cost of production with both shifting and fixed cost which taken into account as well. Generally, additional cost is fixed and also have cost in with profit which looks up in that compare the marginal costing method as well in better manner too.

Income statement on basis of the marginal costing method:

From above statement, it can result as which note change in closing stock and having an valuation of 2500 that has an valuation through the marginal costing which leads to have an settlement of fixed cost when it is coming in for 2125.


P4 Different Kind of budget are there and having pros and cons of it.

There are various types of budget which is being prepared by the management of the Tech UK limited wit having an main objective of operating the business in better manner way. It does include master budget, operational budget and also having an cash flow budget. Types of budget are as under:

Master budget: It is considered as the strategy that also need to forecast the future sales, production level and also having an capital investment as well which requires a proper execution of the future business activities in better way. Budget is something that is also interrelated with the budget and also has an different kind of department of firm (Nixon and Burns, 2012). Even though, it is something which is generally needs to be having an goal of making an impressive plan for not performing objectives in better way.

  • Advantages: It is that which include all the cost that is being incur with the production process as well.
  • Disadvantages: Budget is such which needs to be made an preparation of specific activity that has an reliability for accurate information which may be reduce.

Operational budget: Budget must cover some revenue and cost as well which incur on daily basis with operating business activity in better way. Cost is such which is incurred with production process which also consider the overhead and administrative cost which is being used to identify a management of firm in right context.

  • Advantages: It is that which also represent revenues and cost which do incur in with the daily business activities operations. Generally, it is such which help in decrease of cost that incur with upcoming business operation in right manner too.
  • Disadvantage: Normally, they also consume more and more time to have an preparation of the operational budget with having an functions of firm in effective way.

Rolling budget:- It is there that some regular update include new budget period and having an most current budget within time completion as well. It is that which needs to consist of incremental extension of existing model.

  • Merit:- This assumption are used to create maximum revenue and leads to forecast of firm in great manner.
  • Demerit:- It is required to consider various consuming process that has an general figures provided by firm.

Fixed budget: It is such which cannot be changed and stay in same condition for the longer period and do change condition to sale and having an other action which either may gain or alteration in for some time. Normally, it is such which also allow the change in financial plan with command to implement various enterprise action.

  • Advantages: It is that directly lead towards the measurement of growth and success of the small entity too in grew way.
  • Disadvantage: Generally, it cannot be adjusted for having an different factor which is having an on price of raw substantial, interest rates and also having an degree of rivalry as well in great way too.

Cash Budget: These budget are those which do record cash related transactions which needs to be done in an accounting period of time as well. It is required to take some of information from the particular operation, investing and financing as well.

  • Advantage: Cash budget help in determining the cash inflows and outflow which incur by firm during an financial period too.
  • Disadvantage: Even a time of recovery is finished with completed managers then it cannot make it further changes which is made under budget as well.

Flexible budget: is include various type of budget which can be adjusted and modification is there in business activities too (Otley and Emmanuel, 2013). Basically, manager of firm do identify the needs of changes.

  • Advantages: It helps in changes in budget on time to time which help company too.
  • Disadvantage: In this need of financial activity is there which execute the business activity and funds are required with adjustment too. It is such that also has increase in cost with activities too.

Importance of budget for controlling and action plan:

Creation of financial: Budget is such which do determine way of executing that business activity in effective and efficient way.

Plan for future growth: Budget is such which help in attaining growth, If plan is made in effective way. Tech UK should have plan and strategies which do grab an opportunity with gaining an competitor benefit.

Financial budget do help company to know as which department is required how much of investment in better manner and needs to understand the budget in effective way. Budget needs to be decided as this could help firm to gain a higher income and revenues in better way too.


P5 Management Accounting with financial problem too.

According to investigation tech UK faced an loss of £1.5 million because of financial position in market. To ignore problems of finance, various tools needs to be acquired as:

KPI: Key performance indicators are that which indicate each thing that help in measurement of performances with worker and comparison of existent with standardised execution, if steps are there then management is also having an rectified position in right steps too (Parker, 2012). KPI should be used in proper manner so that success can be achieved in better way.

Balance scorecard: Approach is that which is considered as helpful in positioning enterprise action with plan and strategy which is being implemented with firm so that activity is also having an proper evaluation of coordination too.

Few perspectives of balance scorecard:

Financial: It is needed concept for company to have an attainment in better way and financial position of firm which is done with possible available resources that should have an proper utilisation in right way.

Just in time: It is Considered as process that order some of the inventory only and while management is such which do feel like having an shortage of raw materials too. Generally, reducing the cost of inventory is there in which management also decide some store with unwanted resources with warehouses as well in ordered that needs to be occur in production process too (Pipan and Czarniawska, 2010).

Comparison of Tech UK with 4com plc.

Tech UK


Balance scorecard approach is considered with minimisation or elimination with issues and also capture large market share.

Management has to make an focus which also lead to analyse the financial information in better way with reduction of financial issues too.

Main objectives of firm needs to look for large number of issues with original occur.

Objectives are such that needs to be captured by large market and also needs to attain some of the goodwill that do help in attracting customer.


Above report concludes as, management accounting is that which help company to gain the advantage of market and also lead to get some of crucial information about the finance and non-finance transaction which is held and also lead to have such on regular basis with company too, although this works and help firm to take an competitive decision and produce strategy in effective way. Report is such that has included all the variables like balanced scorecard and KPI etc. even though it is such which adopt different thing that minimise the risk in perfect way.

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