Nowadays everyone is striving hard to gain the competitive advantage in other firm. Management Accounting is the most effective tool which can be used in the business for gaining the competitive advantage. This is the report which is made by the management accountant in order to gain the sustainable development in an effective manner. Various management accounting systems are used in this report (Management Accounting, 2017). However, there is a high requirement in order to gain the sustainability in an effective manner. On the basis of these accounting systems, various reports are made under this. Net profits are calculated by using absorption and marginal costing that can be used. Various planning tools are used in order to control the budgetary systems in an effective manner. This report is made on the Zylla company which mainly deals in retail clothing segments and also used in the project which are used in the organization for gaining the sustainability.
Management accounting is the procedure which helps in identifying, analysing, evaluating ans assessing the non-financial information for a particular period of time. However, there is a strong needs to make a certain tools that can be used in order to gain the sustainability in an effective manner. The main benefits of the management accounting systems are to gain an effective decisions in an effective manner. However, there are various management accounting systems are used:
Job costing system: This is the system which does not only calculates the costs of an individual product. On the other hand, this is the most effective tool that can be used in order to gain the sustainable development. Here, the cited company needs to adopt the job costing system in their production process so that the manufacturing process can be run effectively. Now, there is a strong need to adopt their tools that can be used for gaining the sustainability. This is an alternative use which is to oversee if any kinds of extra costs covered could be billed to the clients. This costing systems is to collect costs during a small unit level. For instance, job costing is effective for deriving cost of making a custom machine, designing a software program, making a building, or production a small batch of the products. Job costing systems covers the following accounting activities:
- Materials: This covers cost of factors and after that assign these kinds of costing to a product once the various factors are used.
- Labour: Employees charges their time to the particular jobs, that are then allotted to the jobs which are relied upon the labour cost of the employees (Amoako, 2013).
- Overhead: This covers overheads costs in cost pools and after that this allocates these kinds of costs to the jobs.
Cost accounting system: This is the system which can be used by the organisation in order to lower the cost of the product efficiently. However, this management accounting tools are used in order to gain the competitive advantages in an effective manner. Cost accounting system is the main crucial tool that can be used by the organisation in order to lower the cost in an effective manner. The production department of the cited organisation would get to know about their business objectives in an effective manner. Henceforth, there is a strong need to adopt this accounting system in the organisation's process for gaining the competitive advantages in an effective manner.
Price optimising systems: This is the most effective tool that can be used by the management accountant in order to know the price of the competitors in an effective manner. By knowing the price of the rivals' product, cited organisation could fix the price of their product and gain the competitive advantage in an effective manner. This is the system that can be used by the organisation for effective services.
Inventory management systems: this is the system which can be used by the organisation for gaining the sustainable development in order to gain the pre-set objectives. By using this technique, company could effectively use their available resources in an effective way. Now the cited company would get to know about the performance of the cited organisation's inventory so that their business could gain the sustainability in an effective manner.
These are the systems that would help out gain the sustainable development in an effective manner. Now, there is a strong chance to know about the business in an effective manner by using management accounting systems.
Management accounting systems are the most effective tools which can be used by the organisation in order to make the reports for the concerned departments. There are so many reports which can be made by the organisation in order gain the sustainable development in an effective manner. Here are some of the reports which are made hereunder:
Budget reports: This is the reports which is made on the future forecasting of the revenue and expenses in an effective manner. Now, there is a chance in order to gain the sustainable development. This budget reports helps the organisation to make strategies about the future forecasting in terms of the revenues and expenses (Vinayagamoorthi and et. al., 2012). This is simply said that the budget can be made in order to gain the sustainability in an effective manner.
Accounts receivable reports: This is the report which is made on the basis of the debtors. Here are certain tools which can be used by the organisation in order to know about the debtors earnings in an effective manner. Here are certain tools that can be used by the organisation in order to know the financial viability in an effective manner. There are certain tools that can be used by the organisation in order to make certain pre-set tools in an effective manner.
Job Costing report: This is the reports which is made by the manufacturing department in order to make the business product cheap so that the competitive advantages can be gain in an effective manner. Now, there is a strong chance to make the business objectives in an effective manner. Job costing reports are made after assessing the business objectives in an effective manner.
Inventory management report: This is the report which is made on the basis of the inventory of the cited organisation. There is a strong needs to make certain objectives by knowing inventory of the cited organisation (Macinati and Anessi-Pessina, 2014). This is the report which is made on the basis of the concerned objectives in an effective manner. By using this report, management accountant uses diverse objectives in order to implement the certain objectives in an effective manner.
Performance report: This is the report which is used by the organisation in order to assess the positive results of an activity of an organisation. This report might compare the actual outcomes to budgeted or standard, and also use the deviation between the two figures. The recipient of the performance report is forecasted to have action at the time of unfavourable variance. Here are some of the instances of performance reports:
- Employees' attain an annual performance report, which explaining their activities versus their actual action plan.
- A project manager attain a periodic performance report which would ultimately noting cost and time to over run the latest project outline.
- A local body issues an annual performance report which demonstrating the services rendered by diverse city departments.
There are above mentioned report which can be used by the organisation in order to make sustainability in an effective manner. However, there is a strong chance to implement them in order to attain the pre-set objectives in an effective manner (Lim, 2011). The cite organisation would also make strategies in order to gain the competitive advantages in an effective manner.
Management accounting systems helps to know about the cost of product effectively. However, there are certain tools which can be used by the organisation in order to assess the objectives of the Zylla company. These management accounting systems helps to overcome the price of the products efficiently. These kinds of the objectives would helps out to gain the benefits in an effective manner. Accountant would get to know about the management systems and apply where it essential. There are so many tools which could be used by the organisation in order to assess the performance of the cited organisation effectively.
There are so many tools which can be used by the organisation in order to integrate the organisational processes. MA systems would help out to form management accounting report so that the efficient and reliable decisions can be taken out for the firm's development (van Helden, and Uddin, 201). It is helpful for efficient smooth operations of their functions. But, this can be rightly said that only one of them would able to gain the sustainability in an effective manner.
Marginal costing: This is the costing tools which covers marginal costing that covers variable costing of the firm. However, this does not covers the fixed cost that can be used by the organisation in order to gain the sustainability in an effective manner. However, this is the most effective tool that can be converted into various kinds of tools. Here the marginal costing is used in order to know the profitability.
Absorption costing: This is the costing method that covers all the fixed and variable costs which can be helpful for knowing the costs of the product in an effective manner. However, this can be rightly said that the management needs to adopt this tool for assessing the value of the profitability in an effective manner.
Net profit using marginal costing
Less: Variable costs
Stock at the beginning
Cost of production
Stock at the closing
Variable sales overheads
Less: Fixed costs:
Fixed Production overheads
Fixed Selling overheads
Income statement as per the absorption costing:
Selling Price per unit
Direct materials cost
Direct Labour cost
Variable manufacturing overhead
Total variable production cost
Fixed production overhead
Fixed production overhead incurred actually
Fixed selling & distribution expenses
Variable selling & distribution expenses
15% of sales value
Net profit using absorption costing
Less: Cost of Sales:
Cost of production
(Under)/Over absorbed fixed production overhead
Less: Selling Expenses
Variable sales expenditure
Fixed selling expenditure
In this cited case, cited organisation is needed to implement the management accounting systems in order to enhance the profits in an effective manner. This would assist to run their business activities in an appropriate manner (Gates, Nicolas and Walker, 2012). These methods would implemented by the management accountant for enhancing productivity of the organisation. These kinds of tools are implemented and crucial for each departments for the organisation in order to gain an efficient decisions for organisation's growth and attain their objectives.
The net profits that are achieved along with the assistance of absorption and marginal costing. Here are various methods which can be used in order to know and optimise the net profits in an effective manner. By using marginal costing and absorption costing tools, net profits is identified. By using absorption costing technique, company occur losses of 375 an in marginal costing losses, while using marginal costing, company have 2875 losses which is more than the net profits calculated by using absorption costing. Henceforth, this is rightly said that the absorption costing is much than the marginal costing technique.
Budget is the tool which helps to forecast the revenues and expenses for a particular period of time. This helps to know about future value of the Zylla company that would ultimately help out to gain the sustainability in an effective manner. Budget is the main tools which would gain the sustainability in an effective manner. Various budgetary tools are used under this and their advantages and disadvantages are mentioned under this in an effective manner. In other words, it is one of the most important effective method and technique where company manager can predicted their total cost and expenditure that are going to incur with the help of an organisation. Along with this, it is systematic and predetermined gathering of recording for particular time period. It is effective framework of planning and operations for specific target groups or teams. Generally, it is prepared for around five years. This can be precede if outcome are not in considerable.
Budgetary control- It define as effective method and tool that is used in business operational activities that includes controlling, planning and monitoring performance of the firm. In this, it is actual income and whole spending can be analysed along with planning revenue. It is necessary for company is to follow the certain process for maintaining balance (Hiebl and et. al., 2015).
Process of budgetary control
- Research with concern managers- It is essential stage for company managers where they are developing and making accurate evaluation about requirements of budgets within an organisation. Along with this, budget are made after consulting with each type of departments.
- Determination of appropriate assumption- After collecting data and information from all division that includes marketing, finance, HR and operation. This prediction is made about common strategies and policies which estimate future.
- Set organisational information for budgets to accomplish targets- In this procedures, the very famous list of details data has been prepared by collecting data that are gathered from department.
- Measurement of data with actual- The position of an organisation is evaluated with using actual data and information according to the standard. By this, they are getting accurate results of performance in proper manner.
- Review analysis- This is the last step under budgetary control. So company manager can looks about describing steps which required before developing into specific actions.
Planning tools- In an organisation, planning define the administration method which mainly associated with vision of firm. There are different types of methods which are used to control budget that are as under:
Forecasting tools- This is based on assumption that is based on internal control management which consist with effective skills, knowledge and decision making procedures. It is relies on historical information and data for predicting data and facts (Jalaludin, Sulaiman, and Nazli Nik Ahmad, 2011). These prediction assist the administration to understand about industry trends and desired occurrence that are arise in the market such as prices, demand and labour.
Advantages- It is important for industries which analyse the setting goals and targets. Company manager can predicted total cost and sales volume which occur in the future.
Disadvantage- At some time, this is not consider as important method to forecast the whole assumptions and it is complex for estimate total expenses or cost of company.
Scenario analysis tools- For the using of this method, managers can achieve their response according to their latest trends in market. This will help in doing planning, operating and investing management of an organisation.
Advantages- In this, manager can generate effective ideas regarding their selection and future opportunities which are always uncertain.
Disadvantage- It can be analysed that it is not so appropriate along with changes in strategies or policies which are not able to generate correct result (Zang, 2011).
Various planning tools are used by the organisation in order to make certain sustainability in an effective manner. However, this can be rightly said that the management needs to adopt various management tools which can be used in order to gain the competitive advantages. There are above mentioned planning tools which could be used in order to control the budgets in an effective manner. However this can be rightly said that the business objectives in an effective manner
Zylla is small organisation which deals in retail clothing. In providence of business functions and accomplishment of their objectives, many issues are arise which affects their working efficiency (Vakalfotis, Ballantine and Wall, 2013). This will results in raise of many financial issues which lowers down the capacity of organisation regarding accomplishment of their objectives. The main reason which is analysed that such issues are arise due to use of outdated technologies. Some other issues which contributes in the development of the financial problem is Zyalla are mentioned below:
- Product and services quality: One of the major aspect which is associated with the working of Zylla is low quality of their products which does not satisfies the different demands of customer. This will arise lowers down their sales and profit.
- Control and management system: It is observed that there is lack of control and monitoring system within the organisation which results in duplication of activities and improves cost of production.
Management accounting is important concept which includes different tools and techniques provides the opportunity to the management of Zylla to overcome from their financial issues. Such different tools are defined below:
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Key performance indicators: It is important technique which helps in collection of information from different sources (Bodie, 2013). It is further classified into two parts which are named as financial and non financial.
Financial indicators: This will includes different types of financial documents like income statements, balance sheet and cash flow statements which helps to ascertain the financial issues and position of organisation in current scenario. There are different terms which helps to respond and identification of issues are defined below:
- Current ratio: This shows the ability of organisation to pay their short term debts through application of short term assets.
- Quick ratio: It helps in assessment of liquid assets with the organisation to pay their debts.
- Working capital: This shows about solvency of organisation which helps in performance of day to day functions.
Non financial indicators: This includes such indicators which are related to the employees, company profile, quality of product etc. The contribution of such factors in assessment of issues and response is defined below:
- Management of human resources: To attain success in their business operation need to manage their employees in effective manner as they are important assets (Lukka and Vinnari, 2014). This provides the opportunity regarding reduction of staff turnover, improvement in the job offers accepted etc.
- Product and service quality: There are many financial problems are arise due to low quality of products. In this regard, they need to use innovative techniques which contributes in attainment of sustainability in their operations.
Benchmarking: Another important technique which helps to respond financial issues which are arise in Zylla. As per the provision of this approach, organisation is need to set the standards which guides the employees in performance of their different tasks and accomplishment of organisational objectives in more optimum manner.
Comparison between two companies
It uses the techniques of KPI and Benchmarking which helps to improve assess issues and implementation of effective strategies
For accomplishment of their objectives within stipulated period of time by following the SMART objectives
Use of tool Financial governance to fulfil the regulation provided by government
Budgeting technique is used to forecast future actions to improves performances
The role of management accounting for attaining sustainability in the business operation is understood from the points which are defined below:
- The manager have the duty is to provide support in preparation of strategic goals which guides employees (Wickramasinghe and Alawattage, 2012).
- The different management accounting tools like standard costing and break even analysis helps in integration of the different important aspect in organisational processes.
- Provisions of management accounting helps in development of production reports which contains the information regarding sustainability impacts. This is further used to improve understanding about pricing and budgeting decisions.
There are many planning tools which helps in solving financial problems for attaining sustainability in their business functions which are defined below:
- Scenario tool: One of the important planning tool which provides the opportunity regarding early determination of risks. It contributes in formulation of contingency plans.
- Forecasting tool: This tool helps in preparation of budgets which guides employees in performance of their functions (Hilton and Platt, 2013). Through this objectives are attained within stipulated period of time.
From the above mentioned calculation, this can be rightly said that the Zylla company would use various management accounting techniques in order to gain the sustainable development. Various management accounting systems are used under this for achieving its pre-set targets effectively. On the basis of these systems, various reports are made for making the sustainable development. Net profits is calculated by using absorption and marginal costing approach so that the profitability can be attained. Various planning tools are used for budgetary controlling of the cited organisation. In this report, financial problems are assessed by implementing management accounting.