Qualification - Pearson BTEC HND in Business (RQF)
Unit 5 Management Accounting
Assignment Context and Business Scenario
Select a company of your own choice and assume you have been appointed the Assistant Management Accountant of that company which has been operating in the industry for a number of years, which has undergone a number of changes over some time, and has expanded into new markets through acquisitions.
The Finance Director considers that the existing management accounting system needs to be revamped to make it more relevant to the changes that have occurred.
You are required to review the existing system, and conduct a research on developments in management accounting, with the view to recommending comprehensive changes to the company's management accounting system, and preparing a report of same to the Finance Director for review and onward submission to the Board of Directors.
Your report must consider a number of themes in management accounting. Specifically it must recommend changes that cover the following:
1. Management accounting and management accounting systems,
2. Management accounting techniques for determining costs,
3. Management accounting planning tools, and
4. Response to financial problems using management accounting.
Your report must also provide examples of income statements prepared on the basis of absorption costing and marginal costing. In order to do this, you may use the data attached to this assignment brief, or you may collect your own data for that purpose. These may be presented as appendices appropriately referenced in the body of your report.
Your report must be appropriately structured. The following is suggested as a guide of how a good report should be:
• An introductory section with brief a description of your selected company and what the report is about.
• The main section (body) of the report, which may be subdivided on the basis of the four themes listed above corresponding to the tasks on the next page.
• A concluding section that briefly summarises your work.
• All calculations must be disclosed in the appendix
What you must do
The following issues are required to be carried out:
LO1: Demonstrate an understanding of management accounting systems
Provide a brief description of your chosen organization and then explain management accounting and the essential requirements of different types of management accounting. You should also explain different methods used for management accounting reporting.
Having explained management accounting and different methods used in management accounting reporting, you are required to evaluate the benefits of management accounting systems and their application in your chosen organisation.
As demonstration of your ability to apply the management accounting systems, use your chosen organization to critically evaluate how management accounting systems and management reporting is integrated in your organisation.
LO2: Apply a range of management accounting techniques.
Using examples from your chosen organisation, calculate costs using appropriate techniques of costs analysis to prepare an income statement using marginal and absorption costs. In addition to calculating costs, you should accurately apply a range of management accounting techniques and produce appropriate financial reporting documents. You must attach all financial data you use as an Appendix.
Based on your understanding of management accounting techniques, you should produce financial reports that accurately apply and interpret data for a range of business activities.
LO3: Explain the use of planning tools used in management accounting
The budget is an important control tool. Explain the advantages and disadvantages of different types of planning tools used in budgetary control (Please note the calculation of these tools is not necessary). You are also required to analyse the use of different planning tools and their application for preparing and forecasting budgets.
LO4: Compare ways in which organisations could use management accounting to respond to financial problems.
Using your chosen organisation and another organisation, compare how organisations are adapting the following management accounting systems to respond to financial problems:
- Key performance indicators
- Balance score card
- Activity based costing (ABC)
- Financial governance
You should analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success. Use examples from your chosen organisation.
Based on your knowledge of planning tools, you are required to critically evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success. Use examples from your chosen organisation.