Management Accounting Assignment -

The overall aim of this assignment is to introduce the fundamentals of management accounting which apply to the wider business environment and the organisations which operate within that environment. Students will explore how management accounting uses financial data to aid planning decisions, and the monitoring and control of finance within organisations.

On successful completion of this unit students will be in a position to present financial statements in a workplace context and be able to assist senior colleagues with financial business planning. In addition, students will have the fundamental knowledge and skills to progress onto a higher level of study.

Task 1 -

• Demonstrate an understanding of management accounting systems.
• Apply a range of management accounting techniques.

You are a Junior Management Accountant for a medium-sized enterprise in the manufacturing sector and, in an effort to promote understanding between different departments in the organisation, you and your colleagues have been asked by your line manager to deliver a presentation on the role and function of the management accounts department, covering the management accounting systems operating in the organisation as well as the range of techniques used. This assignment has two parts:

Part A: Portfolio of calculations and comments

Assessment criteria covered

P3 - Calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costs.

M2 - Accurately apply a range of management accounting techniques and produce appropriate financial reporting documents

D2 - Produce financial reports that accurately apply and interpret data for complex business activities.

Produce a portfolio of completed calculations for financial statements, including income statements using data from the scenario below:

Scenario - Assume that the company uses FIFO when valuing stock. The company is faced with a choice of either using the marginal costing approach or the absorption costing approach to the valuation of stock in its financial statements.

The following information is also provided

(a) Total fixed indirect manufacturing cost is £92,000 per year.

(b) Direct labour costs over each of the three years were £10 per unit.

(c) Direct material costs over each of the three years were £13 per unit.

(d) Variable expenses which vary in direct ratio to production were £7 per unit.

(e) Sales were: Year 1: 2,600 units; Year 2: 3,500 units; Year 3: 3,200 units. The selling price remained constant at £85 per unit.

(f) Production is at the rate of: Year 1: 3,500 units; Year 2: 3,800 units; Year 3: 3,650 units.

(g) Other overheads are as follows:

• Distribution expenses £24,000 for each year
• Administrative expenses £89,000 for each year

(h) Interest expense: Year 1: £1,100; Year 2: £1,000; Year 3: £nil

(i) The company's applicable corporation tax rate is 19%

Required: Prepare an income statements using marginal and absorption costs for the three years (6 income statements in total) with calculations / workings and comment on the results.

Part B: Presentation

Assessment criteria covered

P1 - Explain management accounting and give the essential requirements of different types of management accounting systems

P2 - Explain different methods used for management accounting reporting

M1 - Evaluate the benefits of management accounting systems and their application within an organisational context

D1 - Critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes.

Prepare a presentation that includes supporting calculations from the portfolio of completed financial statements in part A above and that covers the following:

1. An explanation of the principles of management accounting,

2. The role of management accounting and management accounting systems,

3. The use of techniques and methods used in management accounting by presenting calculations for an income statement using variable costings,

4. Explanation of how management accounting is integrated within an organisation,

5. The benefits of the function to the organisation.

Task 2 -

• Explain the use of planning tools used in management accounting.
• Compare ways in which organisations could use management accounting to respond to financial problems.

As a newly-qualified Management Accountant, you have been asked by your line manager to produce a report which analyses the organisation's use of planning tools to ensure financial stability and performance as well as ways in which management accounting has played a key role in preventing and solving financial problems. This assignment is in the form of an individual management report.

Assessment criteria covered -

P4 - Explain the advantages and disadvantages of different types of planning tools used for budgetary control.

M3 - Analyse the use of different planning tools and their application for preparing and forecasting budgets.

P5 - Evaluate how organisations are adapting management accounting systems to respond to financial problems.

M4 - Analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success.

D3 - Evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success.

Report Contents:

a) Explanation of the advantages and disadvantages of different types of planning tools used for budgetary control.

b) Analysis of the use of different planning tools and their application for preparing and forecasting budgets.

c) Evaluation of how organisations are adapting management accounting systems to respond to financial problems.

d) Analysis of how, in responding to financial problems, management accounting can lead organisations to sustainable success.

e) Evaluation of how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success.

Attachment:- Assignment File.rar