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Learn Management Accounting - Tech UK Limited

University: UK College of Business and Computing

  • Unit No: 5
  • Level: Undergraduate/College
  • Pages: 7 / Words 1863
  • Paper Type: Assignment
  • Course Code: H/508/0489
  • Downloads: 650
Question :

You are working as Trainee management at Tech UK limited which is dealing in producing special charger for retail outlet but they lack in financial information for effective decision making.

  • Explain management accounting and comparison between management and financial accounting
  • Provide income statement including absorption and marginal costing methods
  • Evaluate different kind of budget structure, budgetary process and significance of budget as beneficial tool for planning.
  • Provide financial position of Tech (UK) LTD and methods by which balance score card can be used for responding to financial problems.
Answer :
Organization Selected : Tech UK Limited


Management accounting is that branch of accountancy which is based on how company and managers of business is gathering all information on financial data and then interpreting it to make it understand. The data which is been included within company only this means that no information could be communicated to third party of business as that is to be used by company itself. With the help of preparing data like that of financial accounts, balance sheet would then be telling company what is their profits and loss into particular investment. In this current report which is including management accounting systems that are used and differentiation it with cost accounting could be done. It is based on Tech UK limited retail store so that they could be able to enhance their operations with help of various tools like that of planning and budgeting as well. Furthermore, discussion is made on marginal and absorption costing which would be utilised in taking out net profits then towards the end suggestion is made that whether balanced scorecard approach is good in responding problems or not.


P1 Explaining management accounting and vital necessities of it

Management accounting could be used by Tech UK in interpreting their financial stability and investment criteria as well and then company would be able to take their decision of further application of money in strategies. All the information that is been used and included within this type of reporting is majorly internal information and analysed by management or professionals of business only. Then this would be helping firm and managers of company in improving their financial terms and conditions which is thus enhancing efficiency (Otley, 2016).

These information that are used in management accounting is then helping company and managers into their decision making. As accountants would be facing majority of problems or issues regarding where to invest, how to raise capital and how to control the cost of firm. These problems are thus solved if company or managers are using management accounting as their tool of decision making. Firm should be analysing that which type of product they would be able to manufacture if they are using specified cost techniques and the taking buying decision of the raw material.

On the other hand financial accounting is that type of system which is used to analyses market position of company and how they are doing investment. As this type of information would be used and interpreted by third party as well and tracking the financial transaction of firm. The main difference which would be seen between both these types of accounting system is their use and people who are utilizing that information further distinction is made as under:


Management accounting

Financial accounting


It is that provision towards company which is helping in giving information to company on their financial statements and then making further decision for company

On the other hand this is that type of gathering and preparing of financial data for company which would be used by other parties as well and mostly to communicate position in markets (Leotta, Rizza, and Ruggeri, 2017).


All the internal people could be regarded to as consumers or users of data which is contained into this report. The consumers would be like that of managers, employees, board of directors, auditors and other internal committee.

The information which is included within this reporting is both internal as well as external users. The internal could be the previously stated and external would be that of government, law makers, investors, shareholders and bankers as well.

Laws or frameworks

There are no such rules or law which would be regulating the management accounting principles. As the data could be prepared by all of they and they would be able to present information.

In this financial accounting there are certain laws and standards which are important for each company to follow. They include like that of GAAP, IASB and IFRS these on international level which is required to each and every company to follow.


In this all information and data which is gathered and analysed would be focusing on each separate departments of company. Their information is taken and then analysed in making decision for future purpose.

Whereas main focus would be shifted towards records of past transaction and then analysing company’s data.


Cost accounting would be the most essential part of accounting system which is finding and lowering down the excessive wastage of cost in manufacturing and delivering of goods and services. This system would be used in analysing the cost of commodity in taking various factors into considering profits, valuation of inventory and controlling of cost under this. Then afterwards company could be able to perform or analysis the cost of product which is best suited for particular activity of products as well. This Tech UK limited would be using this cost accounting technique into consideration which will be controlling the cost of store by monitoring them as well (Fornaciari, L., 2018. ).

Actual costing is that part of accounting system which is considering the fixed and actual cost of products and service which is thus determining the price of products. So this type of technique is inculcating past and actual both cost of product which is used and valued by items and commodities.

Normal costing is used as per the production per unit of products and incurred at that time when company is undertaking operation activity. These activities would be including like that of all direct expenses which are labour, material and overhead cost as well. Thus they would be making payments of those cost which is useful for the tasks for Tech UK limited company and its stores.

Standard costing whereas would be including variation or difference between that was estimated by firm with that which is actually been incurred by them. Thus and standard cost would be analysing that whether company is making profits or loss for company does material or labour is performing in good way or not. Then they would be able to determine the profit or price of product by estimating the difference between both cost.

Inventory management system is that which is utilized by firm in order to track out what is the level of raw materials and inventory would be used. By checking out inflow and outflow of inventory which is been used by company in order to purchase, produce, pack and parcel it to end consumer. It is the recording and analysing which type of inventory is been deteriorating and which they would be purchasing so that manufacturing of products are not stopped.

Job costing techniques would be understand as that system that is putting stress on each and every activity or job that are commencing into company. Then after analysing which is department is doing what work they could easily apply cost on them afterwards.

P2 Interpretation of financial information

Whatever information and data which is been gathered, summarised and analysed need to be reported to board and managers of company so that they would be easily taking decision for firm. So it is required that that collected and interpreted data is communicated to higher level authority of Tech UK limited for their decision making. This is on part of managers that they are communicating the above included data to management in correct and fruitful manner which is easy for them to take out relevant information from that. This is very important type of reporting which is helping management in taking out estimated profits of firm, planning and then execution of that planning that how and what is to be done.

There are various types of reports that are used in reporting by the accountants and managers of each and every level of departments in Tech UK limited. As it is illustrated in above diagram that management accounting systems are of various kinds and each of them are having its own meaning and importance into reporting systems:

Budget report-

These types of reports are most important one as they are containing budgets for each and every department of company. Under this Tech UK would be planning and forecasting what is the amount which firm is requiring at present time and form where they are to arrange it. This is combination of budgets of all department of Tech UK and then making or preparing it that of whole company.

Accounts receivable aging report-

This is including that reporting that is containing debtors of firm who have not paid their dues and are still to repay them. In this order company could be making number of debtors, their amount which is due and when they would be planning to pay company back. So this would be helping company in determining who NPA are for firm and who are having capability to pay back. It would be into three period including 30, 60 and 90 days of debtors making imbursement and including how and when they are to make payments.

Inventory and manufacturing report-

This is the most important for firms that are producing and manufacturing products and commodities as they would be using inventory and raw materials. For Tech UK limited retail store it is required to prepare inventory stock register and recording each and every transaction that are based on purchase and sale of commodities. So this is very much important on the part of manufacturing department of company like that of Tech UK. In this there would be included cost of labour, expenses and other cost associated with manufacturing department and then reporting of all those cost (Anand, Balakrishnan, and Labro, 2018.).

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