Qualification: Pearson BTEC Level 4 Higher National Certificate and Level 5 Higher National Diploma in Business management
Unit 5 (H/508/0489) - Management Accounting
Management Accounting case study
Scenario (Covering LO1 and L04)
You work as a Management Accountant in a small and medium organization operating in either a Manufacturing, Retail, Hospitality or Construction sector with not more than sixty (60) employees and an annual net turnover not exceeding £600,000.
In today's competitive and uncertain and dynamic business environment, management accounting plays vital role and therefore decision makers in the organization must understand how to create and use good management accounting information. In today's fragile business environment, businesses need to track performance information that goes beyond just the cost-based information of historic general ledger systems provided by traditional financial accounting information. Good management accounting involves a responsibility to manage a wide variety of critical management accounting information using management accounting system and management accounting techniques such as cost-volume- profit (break- even) analysis, budgetary control, cash budget, marginal costing and absorption costing to produce relevant management report for informed decision making.
This was the summary of the speech delivered by the chairperson of CIMA at a recent global accounting summit in Central London about the role of management accounting, management accounting system, cash budget, cost-volume analysis in an organisation. The Chief Operations Officer of your organization sees management accounting function as very crucial in providing management information for informed decision making within the organization. Your organization sponsored you to attend this summit.
LO1- Demonstrate an understanding of management accounting systems.
LO2 - Apply a range of management accounting techniques.
TASK 1: (ADDRESSING LO1 AND L02)
After this summit, the Management has asked you (Management Accountant) to write a report to covering management accounting and management accounting system together with different costing techniques and reporting to enable the organisation to implement them. This report should include the role and function of management accounts department, covering the management accounting systems, operating in the organizations as well as a range of techniques used. You report should include the following and supported with calculations addressing the financial statements, plus:
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 marginal and absorption costings to show how these financial reporting and statements support business growth and success.
4. Evaluation of how management accounting is integrated within the organization.
5. The benefits of the function to the organization
6. Conclusions that critically reflect the application of management accounting
7. Ensure to see that your report has clearly reflected with interpretation of data for a range of business activities and includes financial reporting documents.
For higher grading you are required to consider developing your answers further based on the given learning outcomes and assessment criteria given at the end of the assessment brief. Across the report you are required to provide various examples to enhance the credibility, currency and depth of the answer. You are also required to support your answer by academic and professional sources as well as statistics when relevant. Harvard referencing to be followed in this task (Citations and reference list) should be provided.
The work should be prepared in a report format as guided by your tutor. Clear headings and subheadings should be included.
LO3 - Explain the use of planning tools used in management accounting
LO4 - Compare ways in which organisations could use management accounting to respond to financial problems
Task 2 covering L03 and LO4
Using the scenario and in your capacity as Management Accountant in your organisation, continue the word report and see that this part is presented in the form of Business report to the Chief Operations Officer addressing other issues in management accounting function. This part focuses on the 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 business report should be able to reflect the analysis of different methods used for management accounting and make recommendations for which of these methods should be applied to achieve sustainable success. Focus on your role assisting the financial accountant :
1. Compare and contrast three planning tools used in management accounting, indicating how effective you judge each to be and why. Your judgements should be supported by examples to demonstrate advantages and disadvantages. Ensure to see that the different planning tools are able to analyse with special reference to preparing and forecasting budgets.
2. Using specific case studies as examples, compare ways in which management accounting is applied, the effectiveness of management accounting in dealing with financial problems and preventing financial problems in organisations.
3. Provide conclusions and recommendations to the organisation on which methods to apply in order to achieve sustainable business success, based on your findings and evidence provided.
For higher grading you are required to consider developing your answers further based on the given learning outcomes and assessment criteria given at the end of the assessment brief.
Across the individual report you are required to provide various examples to enhance the credibility, currency and depth of the answer. You are also required to support your answer by academic and professional sources as well as statistics when relevant. Harvard referencing to be followed in this task (Citations and reference list) should be provided.
The work should be prepared in a report format which includes a business report for Task 2 Clear headings and subheadings should be included.
Learning Outcomes and Assessment Criteria
L01 Demonstrate an understanding of management accounting systems
DI Critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes.
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.
MI Evaluate the benefits of management accounting systems and their
application within an organisational context.
L02 Apply a range of management accounting techniques
D2 Produce financial reports that accurately apply and interpret data for a range of business activities.
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.
L03 Explain the use of planning tools used in management accounting
L03 & 4
D3 Evaluate how
tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success.
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.
LO4 Compare ways in which organisations could use management accounting to respond to financial problems
P5 Compare 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.
The required submission format for this assignment is mix of report format (L01, L02) as well as a business report format (L03,L04), this is listed under the given task. Your submission will be word-processed, written work with clear indication of: the unit number and title, the relevant task being addressed, your name and registration number.
You are expected to use external sources, and clearly reference these in your work. References should be added to the text (next to the quote or paraphrase), and also placed at the end in a references list, using Harvard Referencing style. You should complete a bibliography to support all evidence. The recommended word count for the assessment is 2000 to 2500 words for the first task and around 1000 words for task two, but you will not be penalised for exceeding this.