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HNBS 302 Management Accounting Level 5 HND in Business Management Level 4


Accounting is one of the crucial aspects for an organisation like Tech UK which is operating in order to produce appropriate products and services during the period of time. The main aim of this module is to introduce all fundamental matters of management accounting which is applies to large parts of business environment as well as organisation. The primary responsibility of accountant is to explore different ways one can uses financial data to aid planning decisions and regulate follow of finance within internal as well as external department of an organisation at the same period of time. This project is all about discussing various types of accounting system and reporting methods uses in an organisation. Apart from this, use of various is costing methods to calculate net profit for the company. Merits and demerits of using several types of budgets are also discussed under this report. Comparison of management accounting can use to resolve financial issues are mentioned under th


P1: Concept of management accounting and its essential requirements

Nowadays, it has been seen that administration of various company is to record all essential financial transaction that are occur during the period of time. Management all looking to have an appropriate accounting system will be useful to attain overall aims and objectives of an organisation in regular course of action. Every decision that are made by the company in respect to use of accounting system can assist them to make future business planning in more reliable manner. By the help of this, individual or manager would be having basic information about progress of company growth and coming sustainability that are assist them to reach at set destination in quicker period.

Management accounting is known as one of the effective planning, organisation and evaluating all financial transactions that are done during the production process. As accounting is systematic process of recording, summarising, communicating and controlling all implication and dependencies that are helpful to attain future aims.

Importance of using management accounting system:

There is various crucial significance of using management accounting. It will help Tech UK limited to record their capital flows in right direction at the correct place. Some of them are:

Effective decision making: One of the main motives of this accounting system is to collect all necessary information from every department and make appropriate decision that would be beneficial for longer period of time.

Increase efficiency and productivity: This is another important aspect for management to enhance their overall growth and profitability by increasing their productivity by selling maximum products during one accounting period (Klemstine and Maher, 2014).


Management accounting

Financial accounting

It is the management who is entirely responsible for making various sorts of rules and regulations associated with financial reporting.

All the accounts related policies and laws that are made by companies are implemented in respect to prepare financial statements for the company.

 It is almost always reports at a primary detailed level. Like profit generated by product, customers and geographic region.

These are accounting reports on entire outcomes of an entire business.

Types of accounting system:

Cost accounting system: It is one of the important accounting system which is help responsible for determining total cost company is incurring during the production of product and services. This is a design which is used by Tech UK company to estimate the costs of their products in respect for profitability analysis and cost control. In case of profitable operations, it is very hard to make prediction of accurate cost of products. It consists of various costs such as normal, actual and standard cost during the production process (Lim, 2011).

Inventory management system: It is one of the vital accounting systems that assist manager to monitors and regulate things of value to every business entity or combination of firm. It can apply to either tangible assets and to intangible assets within an organisation at the same period of time. It is seen that various companies used to provide various investors with more specific or diversify multiple option than they will be kept with themselves. There are various techniques which are use by management in respects to control their stock. Such as FIFO, LIFO and AVCO.

Job costing system: This happens to be one of the accounting processes of assigning the cost to a company overall costs that are incur to a particular job an individual or business is associated with. It is globally used in areas where construction process is going on. There are various types of ways by which job costing systems can be analysed such as, batch, process, and contract costing.

Price optimisation system: It is one of the crucial accounting system which is uses as mathematical tool that assist a company to analyse how customers would react to various prices for their products and services by using plenty of channels. It is also used to analyse the prices that Tech UK should determine superior that would meet their aims and objectives like as increasing operating gains for the company.

M1: Advantage of using management accounting

In every business the main aim is to attain as much profit as they can. This can only be done in case company would be able to use various accounting system in right direction at the correct period of time. It has been examine that all those above discussed accounting systems are having their own benefits. Cost accounting will be responsible to control cost that is incurred by the company in their production process. Whereas inventory management can leads to maintain their stock those are being kept by the company with them. Likewise, some other system is equally effective to increase overall profitability for the company (Van der Stede, 2015).

P2: Management accounting reporting method and its types

In the present era, organisations are looking to adopt more reliable accounting systems those are much effective for the company in analysing their business operations in reliable manner. The primary aim of Managers is to collect all necessary data that are occurred within an organisation from the production of product and services. Reporting is said to be a detail document which is prepared by an organisation on the basis of all the information that are collected from every department about their financial performances. There are various sources from which data can be collected for the purpose of making a well organise report that highlight current position of the company. Every information is vital for making future decision making so that maximum opportunities can be created. All the report are submitted to the companies external parties as well as investors to make certain investment decisions in accordance with their coming projects. In the process some accounting systems are helpful for the company. Some of them are discussed underneath:

Performance report: It is known as one of the crucial report which is prepared for the analysing overall performance of Tech UK to collect some vital information about the company. The motive of using the reports is that manager’s uses this as routinely those are produce by government bodies and those are financed by public income. It is needed to determine that total money was spent can have efficiently profitable for the company. A yearly performance report can assist to an organisation to be produced for every employees of a business.

Account receivable report: As per this accounting reports, company would be easily determine the total list of unpaid customers invoices and credit memos according to the date ranges. The report is considered as primary tools which are used for the collection all invoices those are overdue for the payment from debtors. It is categories as present assets that are assumed that they are remaining overdue within one accounting period of time (Lavia López and Hiebl, 2014).

Inventory management report: It is known as one of the effective report which is consider as appropriate supervision of all inventory items that are stored by the company with their warehouses. It seems to be effective element of supply chain management that determine flow of products from producer to warehouses and from there to point of sale (POS). It is used to record all opening and closing stocks of the company.

Job cost report: It is identify as appropriate method of recording all costs of producing job, instead of process. By the help of this, manager or accountant can easily be able to keep track of total cost taken by each job through maintain relevant cost to the operation of businesses. This report data of each job a company are working on and lists of total cost which are incurred on the last year job.

D1: Critical evaluation of reporting method

According to the above mentioned reporting methods, it has been determine that company would be easily be responsible for increase the productivity in more faster rate. The performance report is used to analyse actual position of the company to that with the past one. While account receivable report provide information about total list of remaining payment which are require to be collected from debtors of the company. Likewise, inventory management report is used to analyse detail information about overall stock position of the company.


P3: Different types of costing methods used to calculate net income

In any production process, company need to analyse their cost of manufacturing through using various types of cost. These are directly related with the each unit produced by the company. It consists of various aspects such as:

Cost volume profit: It is one of the appropriate analyses which is used to examine how any modification in costs and volume can affect a company’s overall operating income and revenues.  In performing this particular evaluation, there are various assumptions are needed to be made such as sales prices used remain constant (Hansen, 2011).

Fixed cost: It is one of the effective costing which remain constant with the changes in any production unit during the production of products and services.

Absorption costing: It is known as one of the crucial methods which is directly related with the production process. It consists of both variable and fixed costs at the same period of time. According to this particular nature, it is known as full costing method. The company cannot uses this costing as more reliable for making future decision making in coming period.

Marginal costing: It is said to be one of the primary costing method which is used in case any additional products can be produced by the company with the same resources. It included one variable costs and fixed cost are remain absorb in case of calculating contribution per units. This has been analyse that company used to consider this costing more reliable and accurate for making future decision making.

Income statement as on September by using Marginal

M2: Evaluation of various accounting tools and techniques

In every department there is always be the search that which information would be more beneficial for the company. It can only be determine by using appropriate accounting techniques which will be reliable sources of the company. The entire growth and dependencies can enhance their profitability in coming period of time. There are various methods such as marginal costing which is analyse additional cost of the company. While standard cost are more reliable for making comparison of actual sales.

D2: Critical evaluation of data collected from the income statements

Reconciliation statements


Profit under absorption


Closing stock 500*5


Profit under marginal


As per the above reconciliation statements, it has been seen that Tech UK can have uses two effective methods such as absorption as well as marginal to calculate their net income. The outcomes are showing total net income of 2125. The only differences are arises because of treatment of fixed costs.


P4: Advantages and disadvantage of using different types of budget

Budget is said to be an estimation of future cost and expenses that a company is going to invest for the purpose of producing valuable product and services.  It is frame a reliable strategy for controlling various implications that are arises during an accounting period of time. It consists of all components that are associated with Tech UK as capital are seems to be vital aspects for the company. Although, every business concern assists in designing effective budget in order to control and maintain their expenses in more reliable manner (Fourie, Scott and Kumar, 2011). There are various types of budgets. Some of them are discussed underneath:

Master budget: It is known as combination of all budgets that are prepared by the company during an accounting period. All the information related with various departments are taken into account for the preparation of financial statements.

  • Advantage: Managers can collect all tiny information within an organisation to get an overview of business capital.
  • Disadvantage: It is harder to prepare as it requires more capital or time to do so.

Operation budget: It is said to be annual budget which is prepared of an activity stated in respects of budget that are classified in various parts such as cost account and other crucial factors.

  • Advantage: In included estimate total value of resources that are required for evaluating performance of operations.
  • Disadvantage: Sometimes, company would not be able to record all information as maximum production can be done in a single day time.

Capital budget: It consists of effective process that determines and analyse potential expenditure or capital investments that are made by the large companies (Chan, Wang and Raffoni, 2014).

  • Advantage: It is more effective budget which consists of building a new plant or making investment for more than one year.
  • Disadvantage: It considers only cash detail which is made by the company within an organisation.

Process of budget:

  • The financial department uses to prepared a worksheets to aid the department in charge in formulation of overall estimation.
  • The administrator used to call group meeting of managers and make discussion about the projections.
  • The appointed managers used to work with financial services to prepare an estimate for coming departments.
  • The entire budget is transfer to executive officers for approval.
  • Making reviews or justification of budget that can be necessary in writing.

Pricing method:

  • Cost based pricing: It is said to be appropriate pricing method in which some part of desire capital is included to the cost of a product in respect to attain final cost (Bennett, Schaltegger and Zvezdov, 2013).
  • Demand based pricing: Under this pricing method, a product is selected as per the demand of customers. In case the demand is high the organisation used to set high prices (Demand-based Pricing. 2018).

Benefits of using planning tools:

There are various types of planning tools which are used by the company in order to control the impacts of budgets. Some of them are:

  • Forecasting tools: It is said to be utmost important tool which is used to estimate total costs and expenses which are mentioned in the budgets that are prepared within an organisation.
  • Contingency tools: It is known as one of the crucial tools which help company to deal with any kind of business risks that are arises without any alarm in an organisation (Schäffer, 2013).

M3: Evaluation of various planning tools

All the above discussed tools are more reliable for the company to control every impact that are affecting the overall growth and profitability. Forecasting tools are more accurately essential to control future losses that are happen in an organisation. While contingency tools are used to control and deal with financial risks that are arises in the department.

D3: Critical analysis of financial issues

It has been determine that there are various types of financial tools which are responsible for overcoming financial issues that are affecting internal department of the company.  key performance indicator and benchmarking are consider more reliable techniques which can control all impact that are occurs in an organisation.


P5: Comparison of various ways to use management accounting to overcome financial issues

In every business organisation that are operating at large level are needed to make analyse of financial issues that are affecting the efficiency of the company. There are various financial issues those are arising in the department (Wickramasinghe and Alawattage, 2012). Some of them are directly associated with the productivity and financial sustainability of the company. Under mentioned various financial issues those are present in Tech UK:

Key performance indicators: It has been determined that there are crucial financial and non-financial problems that are related with the company. This can only be overcome by using these particular tools.

Benchmarking: It has been observed that different kind of financial problems that are present without any set standard. These particular tools provide reliable benchmark for the company to deal with other competitors.

Financial governance: It is known as one of effective tool which used to provide right direction to operate their business by following certain rules and regulations in effective manner.

Important characteristics of Accountant:

  • Reliable is making appropriate decision in respect to control performance and other financial information of the company (Hilton and Platt, 2013).
  • Effective communication is considering another important feature of accountant to determine valuable results in coming period of time.

M4: Analysis of financial issues

From the above mentioned financial tools which are responsible for overcome issues like product and services quality and productivity of an organisation. Some of them are resolve by using appropriate rule and regulations that are made by the government.


From this particular report, it has been concluded that management accounting is one of the crucial aspect for the managers to determine better results for the company. In this manner, managers can have various options like accounting and reporting systems that are discussed in the above. While with the use of costing method company easily be able to analyse net profit for the company. By the help of merit and demerit of various types of budget can provide better chance to make better outcomes in coming period of time.


  • Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change: approaches and perspectives. Routledge.
  • Van der Stede, W. A., 2015. Management accounting: Where from, where now, where to?. Journal of Management Accounting Research. 27(1). pp.171-176.
  • Schäffer, U., 2013. Management accounting research in Germany: From splendid isolation to being part of the international community. Journal of Management Control. 23(4). pp.291-309.
  • Lim, M., 2011. Full cost accounting in solid waste management: the gap in the literature on newly industrialised countries. Journal of Applied Management Accounting Research. 9(1). p.21.
  • Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized enterprises: current knowledge and avenues for further research. Journal of Management Accounting Research27(1), pp.81-119.
  • Klemstine, C. F. and Maher, M., 2014. Management Accounting Research (RLE Accounting): A Review and Annotated Bibliography. Routledge.
  • Hilton, R.W. and Platt, D.E., 2013. Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education.
  • Hansen, A., 2011. Relating performative and ostensive management accounting research: reflections on case study methodology. Qualitative Research in Accounting & Management. 8(2). pp.108-138.
  • Fourie, M.L., Opperman, L., Scott, D. and Kumar, K., 2011. Municipal finance and accounting. Pretoria, South Africa: Van Schaik.
  • Chan, H.K., Wang, X. and Raffoni, A., 2014. An integrated approach for green design: Life-cycle, fuzzy AHP and environmental management accounting. The British Accounting Review.  46(4). pp.344-360.
  • Bennett, M.D., Schaltegger, S. and Zvezdov, D., 2013. Exploring corporate practices in management accounting for sustainability (pp. 1-56). London: ICAEW.
  • Amoako, G.K., 2013. Accounting practices of SMEs: A case study of Kumasi Metropolis in Ghana. International Journal of Business and Management. 8(24). p.73.
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