Different Types of Accounting Systems and Reporting

Learning outcomes:

LO1 Determine an understanding of management accounting systems.

LO2 Make use of different accounting techniques

LO3Analyse the importance of planning tools used in management accounting

LO4Evaluate different ways through which organisation can management accounting can use to respond to financial problems.

Brief and Guidance:

Learners must read it properly before answering any questions along with references related to scenario addressing different learning outcomes.

Scenario

Part 1

In present business environment of Alpha Ltd. which is field of management accounting is of importance in an organisation because decisions are related to profit maximisation and wealth creation. Business need to keep track on cost-based information as well as s historic general leader produced in financial accounting information.

A good accounting requires responsibility to manage variety of critical management accounting information using management accounting system and techniques such as cost volume profit analysis, budgetary control, cash budget, marginal costing and absorption costing to prepare relevant reports to make decision making.

You are working as a Trainee Management Accountant in medium sized manufacturing company called Alpha Ltd with 50 staff members and turnover of 500000 per annum. It is famous for its pizza company which is founded in 2001 and now looking to expand its franchising business.

Through this process determine the knowledge and understanding of management accounting function and management accounting systems and importance of information to stakeholders. They also require an understanding of planning tools and its importance in organisation to resolve financial problems.

Task 1: (LO1))

• Define management accounting and discuss the essential requirement of different types of management accounting systems.
• Discuss methods to be used for management accounting reporting.

Note: You need to evaluate how management accounting system integrated with process and help to achieve higher level of achievements.

Scenario 2

You are hired as Trainee Management Accountant by an organisation. Satisfied with your theoretical knowledge, your line mangers want you to use different management accounting techniques and how it can help Alpha Ltd to resolve the problem.

Task 2 (LO2)

Make an evaluation of your skills by giving appropriate solutions to problems that requires application of Management Accounting Techniques.

Task 3:( LO3& LO4)

As a Trainee Management Accountant in your organisation, determine the issues that are existing in management accounting function such as budgetary and budgeting control, performance indicators and variances to boost the interest in accounting functions.

Make use of various relevant accounting material such as news, bulletins, stakeholders report and YouTube, twitter and other relevant sources. It must be convincing and supported by relevant illustrations and maintain value of organisation. It should include:

4. Determine the advantages and disadvantages of different types of planning tools used for budgetary control and its use in your chosen organisation.
5. Contrast how organisation is adaptive to management accounting systems to respond to financial problems and how it helps management accounting lead to have sustainable success.
6. Determine the role of planning tools in order to respond appropriately in solving financial problems to lead the organisation have sustainable success.

Problem1. Alpha Ltd wants to cost its new pizza which it was introducing in the market in summer 2020. The cost and production information are as follows-

Table1-

In each period budgeted activity is 75000 units. There are no opening inventories at the commencement of Period 1 and production to be carried out in this period. The schedule of sales and Production for each period is given below:

1.Using the given information in Table 1, calculate unit product cost and produce an income statement under:

• Variable costing systems
• Absorption costing system

2.Produce a schedule to reconcile the net operating income under variable and absorption costing system.

Problem 2 a. Alpha Ltd has expanded its operations and started manufacturing

health product. Last month it suffered a loss of 18000. The income statement of month is as follows:

1.Use the table to calculate

1. BEP in units and in GBP(revenues)
2. Contribution margin ratio

2b. Alpha Ltd. Is planning to purchase a new machine. It will increase the fixed cost by 236000 and decrease variable expenses by 50%

Compute the CM ratio and breakeven point if the machine is installed.

2c. It expects a sale of 20000 units for next month.

Produce financial statements under two scenarios and present your interpretation.

Scenario 1 Assume machine is not installed

Scenario 2 Assume it is installed

2d. Should the company install the new machine? Give recommendations.

Learning outcomes and Assessment criteria