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Management Accounting Framework & Structure - AZIO

University: London College Of Business Management And Computing Studies

  • Unit No: 5
  • Level: Undergraduate/College
  • Pages: 18 / Words 4458
  • Paper Type: Assignment
  • Course Code: FBM20
  • Downloads: 683
Organization Selected : AZIO Organisation


Management Accounting is considered as a reporting or accounting for directors or administration accounting. It is an important aspect that helps administrators to frame business structure as indicated by hierarchical objective and target (Bradbard, Alvis and Morris,2014). Management accounting framework and necessity of kind of administration accounting structure clarified in this report. Management accounting reports and strategies which are utilized as a part of administration announcing explained in respect of "AZIO" which is a Electronic keyboard manufacturer company, having a strength of approx 48 employees. Primary assessment of MA frameworks and administration revealing done and compositions are characterized in this report. Cost perspective and kinds of methods to ascertain benefit and loss for a period illustrated with example. Utilization of Management accounting procedures and there adequacy assessed subject to deal with financial problems. Role of budgeting and diverse kind of planning apparatuses to help the process of Budgeting also delineated subject to case situation. Assessment of planing devices to react the money related and lead AZIO company to long term advancement explained in this report. Utilization of management accounting system to various associations to deal with money related issues are additionally characterized in this report.

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P1 Management accounting and types of management accounting systems

Management accounting

Administration bookkeeping or management accounting is a process of breaking down the cost, activities, interior financial reports, reports and records helps to managers. There are distinctive sorts of business trades, events, events happened in ordinary business exercises. This additionally contains the successful data which mostly connected with characterizing the basic leadership process and accomplishing the objectives and focuses of organization. Legal narrative and support structure helps in managing these information in crucial and effective way. Organization accounting is one of the basic edge similar to directing projects and division of accomplish the desired outcomes of business.

Managerial accounting contains start to finish learning and thought regarding practical action and organization of business (Springer, Berlin, Heidelberg.Riisgaard and Gibbon, 2014). Social information, data and source to make ground-breaking organizational game plans and methodology are the essential segments considered in management accounting. There are isolated benchmarks and controls made the extent that account the trades as monetary associated, budgetary, patent rights, non financial factors, contracts and statements are recorded in convincing path with the objective that suitable appraisal and revaluation settled on for reasonable fundamental administration outlines.

Management accounting framework is a device to accumulate fundamental data and insights with respect to the administration and tasks in viable and productive manner. There are sort of administration accounting formats are utilized as a part of hierarchical formation of organisation that summarise and outline the data for successful business decision making and assessment. It is essential for association to comprehend the critical business circumstances and situations for better development and advancement of business. There are sort of management accounting systems are utilized as a part of hierarchical formation of business that are characterized as follows:

Price optimisation system: This is a numerical investigation approach which decides the cost of new items and services. Assurance of cost principally relies on various channels and cost focuses. Client discernment and attitude assumes necessary part as far as choosing the cost of items and administrations. Value advancement contains working cost, noteworthy cost, inventories and deals that optimises the cost for various part organisation as retail, saving money, inns car rental administrations and the journey lines and protection organisations. This principally stays concentrated around packing the cost at different cost focuses and merging the basic data in more viable and single arrangement (Schaltegger and Csutora, 2012).

Management information system: This framework gives PC based data and points of interest which assumes essential part in basic leadership and vital arranging. This accounting system is an arrangement of programming projects and informational base which used to record the complex equations and fundamental data with respect to business activities and capacities. There are kind of data remain related with basic investigation and summarisation to achieve the coveted destinations and point of business. SAP HANA, Odoo, SAGE, SAP ERP and Dloibarr are a few MIS models which are generally utilized by associations to help and investigate the administration revealing and recording process.

Job costing system: This is a system which basically connected with joining and combining administration informations shape diverse occupation focuses and areas. In substantial assembling and generation associations which bargains in different items utilize this administration data framework. It gives a total diagram of cost actualized on specific occupation area and focus. There is an efficient request is followed as far as deciding the cost at per cost focus and break down the overheads to each business activity.

Inventory management system: Control of inventories, stock and units in inventories, work in progress units are considered in this accounting framework. This accounting system utilized by administrators and bookkeepers which are lined up with productions and assembling goods process business (Sánchez-Matamoros, Araujo Pinzon and Alvarez-Dardet Espejo, 2014). Stock administration framework gives a way to track the points of interest and stock level for promote generation prerequisite. There are kind of exchanges and exercises occurs in production association, for example, offer of generation units and buy of inventories. It wind up the business problems for managers and accountants to deal with the request level of inventories and administration of Finished product items.

AZIO company would have the capacity to compose and deal with the stock level by actualizing this administration bookkeeping framework. Different stock administration strategies as Economic Order Quantity (EOQ), ABC framework are utilized under this framework which are utilized by directors according to their possibility. This accounting system controls the overabundance utilisation of crude material and stock and enhance the productivity and quality of items. Adequate assessment and control keep the deficiency of inventories, burglary and abuse of inventories.

Cost accounting system: Cost bookkeeping one of the principle branch of administration bookkeeping which determines the techniques and plans toward compacting the cost and upgrading the productivity of association. Sort of costing strategies and methods are utilized to break down the cost and the gainfulness. Occupation costing framework, process costing, standard costing are the kind of costing procedures utilized as a part of this framework. Cost bookkeeping brings about the cost with in business to enhance the quality and profitability of merchandise and ventures.

P2 Different type of management accounting reporting

Management accounting reporting

Reporting is a procedure of gathering the significant and fundamental data in a solitary form and create a condensed report subject to execution, development and improvement of authoritative structure. Management revealing considered as a speciality of setting up the monetary data, adjusting them in a aligned format and condense them parallel to administration choices and development (Riisgaard and Gibbon, 2014). This is seen in a most sensible and what's more convincing enumerating framework for taking a ground-breaking decisions for meeting future advantages or get for the associations. This will be useful in wording to assess display position of firms for making future orchestrating and hypothesis. Generally it is recognize for expanding high grounds over another affiliation or wander contenders. organization help in driving inside activities in a most strong manner by using positive and furthermore exact information of firms. If you want to know more about Use of Management Accounting Techniques in AZIO then click on this link button.

Unmistakable evidence of critical data reports which is setted up by using distinctive data through different sources considered in management accounting reports. Every single basic datum or data can be exchanged to their particular associations for knowing a cash related position of the business. Management reporting is an arrangement which causes supervisors and accountants to record the data and points of interest in a methodical way with the goal that it could be put away to make viable methodologies and plans. Administration accounting reporting assumes imperative part as far as dealing with the data and points of interest for little scale enterprises. AZIO is a vessel maker organization which is a little scale producing organization, Management bookkeeping detailing will be useful to record the fundamental data for better understanding and the arranging. Type of job cost reports are produced in business context.

Job cost reports: This reporting method outlines the cost of generation and assembling of goods and products. This is one of the important reporting method, deals with the activities and little occupation segment in precise way. This is a basic procedure which contains identified with cost and incomes point of view. It recognizes the cost to begin the specific occupation and ascertain the general cost brought about to finish the activity. There is a proper record of cost held by managers. This tracks and control the general cost and deciding the time span of cost. A normal time span and cost is characterized as far as dealing with the cost reports considered in this revealing technique.

Inventory management reports:This reporting method remains connected with breaking down the stock administration reports for successful generation anticipating. AZIO will have the capacity to decide the stock level of made water crafts in deliberate way. This not just decides the necessity of stock for assembling the coveted units but also keep up the business level by managing inventory level. With the utilization of this detailing technique administrators have the capacity to recognize the creation time and cost caused at single unit in a particular time term.

Performance reports: These are the reports which basically recognizes the execution and completion of project and venture share out to executives and managers of business. It is significantly completed the move inside earlier year and furthermore couldn't find approaches to manage trim cost. Managers and also proprietors can utilize this execution spending design to enhance more lifted measure of performance management (Mistry, Sharma and Low, 2014). Essentially, this accounting reports are irresistibly helpful to dissect the certified affiliation position and various affiliation. There is a lawful assessment done as far as dealing with the reports and solidifying them in a solitary configuration.

Account receivable reports:Management of accounts holders is the key viewpoint for business associations which mainly connected with investigate the aggregate sum to be gathered from indebted individuals after a specific time span. There are for the most part three kind of credit arrangements are made for following the indebted individuals as 30 days, 60 days and 90 days credit strategy. This revealing strategy primarily help coordinators to recognize the key components with respect to planning credit arrangement. This additionally decides the normal collecting time frame from account holders. Time length of acknowledge approaches are given according to the believability and recuperation time of individual borrower. On the off chance that debtors can't influence instalment of their obligations then association to need to make strict approaches of credit

M1 Benefits of management accounting systems and their application within association

  • MIS system: It can be introduced by acquiring authorized framework programming structure verified source. It is useful to determine complex business circumstances and abridge the substantial data in single arrangement.
  • Price optimisation system:There are programming organizations which plan programming bundle to cover and handle the intricate business appearance. This gives a device to merge the cost of various product offering.
  • Job cost system: It stays valuable for taking care of the expense of various areas and stores and makes cost arrangements and methodologies in efficient way.
  • Inventory management system: This accounting system mainly controls the stock levels and dealing with the money related data at next level. It diminish the wastage level and upgrade the best possible usage of units ().

D1 Integration of management accounting system and management accounting reporting

Management accounting framework and management reporting both are coordinated with each other and help in arranging procedure and functions for better execution of assignment and tasks. Organization accounting system combines basic information and purposes of intrigue and uncovering techniques goes along with them to settle on a sensible conclusion for essential authority and change outlines. Administration bookkeeping uncovering and accounting structure fundamentally associated with each examining the cash related information to the extent assessing the future and make effective organization methods.

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P3 Costing techniques to analyse profit and loss for organisation

Marginal costing: this costing techniques also called as variable cost evaluating technique which helps in calculating the cost of production and manufacturing goods. This is the cost which characterizes the connection between the adjustment underway units to changes in cost. Normal cost stay steady to negligible cost or proportional to normal cost. This decides the measure of cost to be acquired underway and assembling units. This contains just those cost which influence the administration choices and related with creation and assembling process. Get Accounting Assignment Help from our professional writers at a very cheap price.

Calculation of net profit by using marginal costing method:

Particulars Amount
Sales revenue = (selling price * no. of goods sold = 55 * 600) 33000
Marginal Cost of goods sold: 9600
Production = (units produced * marginal cost per unit = 800 * 16) 12800
closing stock = (closing stock units * marginal cost per unit = 200 * 16) 3200
Contribution 23400
Fixed cost ( 3200+1200+1500 ) 5900
Net profit 17500

Absorption costing: This is the costing framework which predominantly connected with ascertains the cost of inventories by considering general cost with in the association. This help to blend general cost while computing benefit and misfortune for the association. Ingestion costing contains fabricating costs that are consumed by the units created. The cost of completed units in inventories which contains coordinate material, direct labour and overheads are considered in this.

Computation of net income by using absorption costing method:



Sales = (selling price * no. of units sold = 55 * 600)


Cost of goods sold = (total expenses per unit * actual sales = 23.375 * 600)


Gross profit


Selling & Administrative expenses = (variable sales overhead * actual sales + selling and administrative cost = 1 * 600 + 2700)


Net profit/ operating income


Break-Even analysis: this is an analytical approach which is used to analyse the equilibrium point at which total revenues of organisations become equal to total expenditures (Klychova, Faskhutdinova and Sadrieva, 2014). This mainly assists managers and accountants to analyse how much production of sales is required to generate minimum profit.

A.Total number of product sold
Particulars Amount
Sales per unit 40
Variable costs VC = DM + DL 28
Contribution 12
Fixed costs 6000
BEP in units 500
  1. Calculation of break even point in accordance to sales revenue
Particulars Amount
Sales per unit 40
Variable costs VC = DM + DL 28
Contribution 12
Fixed costs 6000
Profit volume ratio PVR = Contribution / sales * 100 30.00%
BEP in sales 20000
  1. Calculation for getting desire profit of 10,000
Particulars Amount
Profit 10000
Fixed costs 6000
Contribution 16000
Contribution per unit 12
Sales 1333.33

Margin of safety: the difference between the actual sales and break even sales are considered as margin of safety sales. It mainly helps to reduce the circumstances and problems related to shortage of minimum stock level and production level. This is also one of the essentials aspect in terms of maintaining the desired amount of production level.
  1. The margin of safety, if 800 products are sold
Particulars Amount
Actual sales in units 800
Break even sales in units 500

M2 Cost accounting techniques and financial reporting documents

  • Marginal costing: This will help to consolidate the information which mainly associated with calculating cost of production and manufacturing units (Johnson, 2013). It assist production management in term of expanding the business scale at large level.
  • Absorption costing: this provides equal opportunities in terms of considering all the expenses and overheads whether related to production process or non production process.

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D2 Financial reports accurately applied and interpret data for a range of business

There are two major techniques are used by managers and leaders in terms of determining the loss and profitability of business (Jacobs and Cuganesan, 2014). As per profit calculation by using margin costing approach profit is calculated as £17500 and the profitability was calculated £15675 by absorption costing.


P4 Advantages and disadvantages of different types of planning tools used for budgetary control

Budgetary control is a procedure which contains compelling utilization of money related and non monetary data which remain related with money related gauge and monetary arranging. Determining data making arrangements, making budgetary reports are some significant perspectives considered in this procedure (Henri, Boiral and Roy, 2016). Sort of arranging instruments are utilized by associations to help process which are characterized as takes after;

1. Forecasting tools

This is one of the fundamental apparatus which figures the deals and income chart of business. It is ascertained with the assistance of PC programming which shapes the figures in graphical frame and gives basic leadership data.

  • Advantages:This gives a fitting data and apparatuses subject to investigate the future determining for deals and incomes.
  • Disadvantages:Forecasted chiefly in light of past situations and results which don't gives clear data and diagram of future exchanges. There is an absence of significant data and perspective found in this arranging apparatus.

2. Contingency tool

This corresponds and unite the data regarding bifurcating the unforeseen components and factors and elucidate the data in successful way (Contingency plan. 2018).

  • Advantages:This gives an apparatus to associate the data in better way and build up a solid foundation for plans and procedures.
  • Disadvantages: This arranging instrument incorporates uncommon masterminding which requires high costs and time (Contingency planning.2018). If there is no plausibility in future than all the orchestrating will achieve vain. This instrument is unverifiable in nature.

3. Scenario tool

This planning tool is designed to evaluate a complete range of scenarios which has possibility to occur in future. It captures a whole range of possibilities and identifies basic trends of uncertainties. These scenarios are constructed using trend analyses and past experiences. The primary objective of this tool is serve benefit of decision making to the organisation. This planning is conducted by managers and other upper level staff of an organisation.

  • Advantages – This tool helps an organisation by developing whole range of possibilities by which organisation can get prevented with any future uncertainties. Another benefit of this tool is that, if a uncertainty occur in future than manager will have all the maesures to overcome from it.
  • Disadvantages – This planning tool requires high skills and cost involvement which impacts budget of the organisation. Another disadvantage is that this tool is uncertain and subjected to risk.

M3 Use of different planning tools and their application for preparing and forecasting budgets

With a particular true objective to coordinate budgetary control, Williams Performance Tenders needs to use diverse masterminding gadgets, for instance, evaluating, plausibility and circumstance (Granlund, 2011). Arranging instrument regularly used by all associations whether sweeping or little scale including William Performance Tenders as it joins confirmation of a couple of costs and costs consolidated into the business assignments.

D3 Planning tools for accounting respond appropriately to solve financial problems

It has been found that AZIO is standing up to various budgetary issues, for instance, quality, salary and inventory cost. To achieve long terms objectives of association it is required to deal with these issues. Organisation need to use few instruments contingencies tools, scenario tools and forecasting tools (D'Onza, Greco and Allegrini, 2016). Forecasting tools are used by organisation to incorporate negligible exertion and Conflicts of interest of AZIO company by estimation of future expenses and costs. KPI will help this association by choosing all the key areas which can realize advantage which will in the end help them in dealing with their cash related issues.


P5 How organisations are adapting management accounting techniques to respond financial problems

Organisations are adjusting administration bookkeeping frameworks according to their sufficiency of business structure and capacity's need. Kind of administration bookkeeping perspectives are receiving by association for creating to react the monetary issues.

  • Profit level: It is basically associated with the general issues associated with AZIO company. When managers are not having the capacity to deal with their capital in very much arranged way then it helps to assist the profit level of organisation. This can make more effect on the activities of the firm (Christopher, 2016).
  • Financial administration:It infers rules which are intended for workers with a longing for getting proper outcomes in their future. As there are various issues that may rises at workplace which are required to oversee in a practical way by the administration of firm
  • KPI:Financial KPI which gives a general examination as far as settling the issues and the quantifiable qualities that exhibits how viably an association is achieving the key business goals
  • Benchmarking: Past accomplishments and norms are utilized to assess the viability of administration bookkeeping frameworks. This sets the parameters to achieve authoritative objectives.

Comparison between the AZIO and Williams Performance Tenders

AZIO Williams Performance Tenders
Dealing with the data identified with organization and overheads it is required to embrace MIS framework which may lead association towards practical achievement. Capacity cost of stock and administration was the primary issue looked by organization. Chiefs utilized Inventory administration framework to over the issue. It deals with the stock level and helped association to spare stock cost.

M4 Responding financial problems management accounting can lead organisation to sustainable success

Management accountancy helps managers to settle the issues and clashes identified with administration issues (Christ and Burritt, 2017). In addition, it also resolve the money related administration issues. Benchmarking, KPI are some estimation strategies utilized by organizations and associations for compelling assessment of budgetary issues. These are beneficial for manageable development and improvement of organisation and build the sustainable structure of organisation.


According to above report, it is condensed that management accounting assumes basic part in internal administration and operations of business. Management accounting meaning and role of kinds of management accounting system to support the structure of association expounded in the report. Managerial reporting strategies associated with management accounting systems are also discussed in this context. Significance of costing methods subject to control cost and upgrading productivity of business additionally characterized in this practical situation. It is summarised that planing instruments which are utilized as a part of budgetary control process and basic leadership likewise outlined in business setting. Value of administration bookkeeping framework as far as breaking down the gainfulness of business additionally characterized in this unique circumstance.


  • Bradbard, D. A., Alvis, C. and Morris, R., 2014. Spreadsheet usage by management accountants: An exploratory study.Journal of Accounting Education. 32(4). pp.24-30.
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  • Schaltegger, S. and Csutora, M., 2012. Carbon accounting for sustainability and management. Status quo and challenges.Journal of Cleaner Production.36. pp.1-16.
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