TABLE OF CONTENTS
INTRODUCTION
3
MANAGEMENT ACCOUNTING AND ESSENTIAL REQUIREMENTS OF DIFFERENT
TYPES OF MANAGEMENT ACCOUNTING SYSTEM
3
APPLICATIONS OF MANAGEMENT ACCOUNTING:
3
MANAGEMENT ACCOUNTING VS. FINANCIAL ACCOUNTING:
4
DIFFERENT METHODS USED FOR MANAGEMENT ACCOUNTING REPORTING
5
COOPERATION AND PARTICIPATION OF EXECUTIVES REQUIRED BY VARIOUS
DEPARTMENTS:
6
ORGANIZATIONAL PROCESSES IN KHAADI.
6
DIFFERENT TYPES OF MANAGEMENT ACCOUNTING REPORTS.
6
EVALUATION OF BENEFITS OF MANAGEMENT ACCOUNTING SYSTEMS AND THEIR
APPLICATION WITHIN AN ORGANIZATIONAL CONTEXT
7
ACCOUNTING REPORTS FROM THE MANAGEMENT AND THEIR INTEGRATION
WITH KHAADI.
7
LO2 APPLY A RANGE OF MANAGEMENT ACCOUNTING TECHNIQUES
7
PRESENT COST CALCULATIONS TO PREPARE AN INCOME STATEMENT USING
MARGINAL AND ABSORPTION COSTS.MARGINAL COSTING:
8
LO3 EXPLAIN THE USE OF PLANNING TOOLS USED IN MANAGEMENT ACCOUNTING
16
CASH FLOW FORECASTING:
17
FORECASTING TECHNIQUES:
18
TWO FINANCIAL PROBLEMS FACED BY THE BUSINESS AND SLOUTION TO THOSE
PROBLEMS.
18
TRACK THE SPENDING AND ADJUST AS NECESSARY.
1
19
FINANCING GOALS TO SOLVE THE PROBLEMS ARE EXPLAINED IN D3.
19
LO 4 COMPARE THE ORGANIZATIONS ARE ADAPTING MANAGEMENT
ACCOUNTING SYSTEMS TO RESPONSE TO FINANCIAL PROBLEMS
19
FINANCIAL INDICATORS:
20
REVENUE RATIOS
20
NON-FINANCIAL INDICATORS:
22
ANALYSE HOW IN RESPONSE TO FINANCIAL PROBLEMS MANAGEMENT
ACCOUNTING CAN LEAD ORGANIZATIONS TO SUSTAINABLE SUCCESS
22
FINANCIAL CONTORTS POINTS
22
LO3&4
23
DEVALUATE HOW PLANNING TOOLS FOR ACCOUNTING RESPOND
APPROPRIATELY TO SOLVING FINANCIAL PROBLEMS TO LEAD ORGANIZATIONS
TO SUSTAINABLE SUCCESS
23
TURNAROUND MANAGEMENT SOCIETY 2014
23
CONCLUSION:
24
REFERENCES
26
2
Introduction
The report explains the various management accounting systems and the essential components of
sound business operations that should be integrated to management accounting reporting. It also
provides a meaningful discussion of management accounting and its techniques as more of a planning
and measurement tool for the entire company to assess its achievement. It will give a better
understanding of the same management accounting system. It frequently involves creating an income
statement using marginal costing and cost of absorption. This study would also examine how
different planning techniques are used as a gauge of organizational performance for budgetary
management. This should help the client understand how many planning resources were used to
prepare and forecast budgets. A comparison is made to demonstrate that companies should use
accounting management to respond to financial problems. This would provide a better understanding
as to how management accounting techniques develop organizational strategies and plans for
consistent application as well as implementation. Khaadi is also involved in computer-aided
production, one of the medium-sized clothing manufacturing companies in the Pakistan as well in Lo3
and Lo4 two multinational companies are discussed Honda and Toyota.
Management Accounting and essential requirements of different types of management
accounting system
“Accounting management refers to the understanding, assessment, definition and reporting of
financial accounting and cost accounting information. Accounting management supports industry
managers in policy development, decision-making and day-to-day activities of the business”. i (Dr.
Suhas Mahajan, Management Accounting, 18 December 2018)
Applications of management accounting:
Budgeting and Planning:
Managers use management accounting analysis to decide what to produce, how much to sell,
how much to pay to meet production costs, and how much to earn significant profits. They
must
also organize the funding of initiatives, the management of funds, etc. For the
business's operations to continue to run smoothly, this is crucial. Capital planning or master
financial planning are two essential matters in this profession which will explain.
Decision Making:
If managers have to assess to choose whether or not start a big project, they need financial reporting
data from management to measure the advantages of multiple opportunities and determine which one
to use. Somehow mangers generally use appropriate costing techniques.
Measurement of Performance:
In order to determine the business's performance, managers must match the real operating outcomes
with budget figures. They use managerial accounting techniques such as normal costing to verify the
3
accuracy of specific projects. They then make improvements in all those units that are not doing well
(xplaind, Mar 18, 2019).
Accounting management's key roles and concepts are also described.
Influence:
Interaction is the primary source of great understanding. Accounting department are involved with
better Interaction if it increases an option of all relevant information as of the different stages of public
policy. It allows for logical thought and decision making to be likely to succeed.
Relevance:
Report can be essential. Management accounting measures its best appropriate data which can boost
the user's decision-making efficiency and achieve maximum use of their decision-making style or
system.
Value Generation:
Analysis of the impacts. Accounting management recognises assessing data when optimizing
possibilities together with the direction of importance generation & efforts on price, threat and price
generation possibilities.
Trust:
Instill faith in Khaadi. While upholding social and policy-making standards, it is crucial that the
authorities involved in accounting management operations are knowledgeable, moral, and
accountable. The decision-making process becomes more practical and accountable as a result.
(Margaret Woods, 2017, p. 121)
Management accounting vs. financial accounting:
Main variations the following topics will be addressed among both management and financial
accounting:
Primary Users:
Management accounting is primarily used internally for managers and staffs, while external
purchasers are concerned with financial accounting, involving investors, lenders, banks, etc.
Set of regulations:
Beneath management accounting, neither implementation of accounting values or outside guidelines
are enforced while Financial accounting covers variety of company laws and regulations.
Sources:
In management accounting, financial and non-financial records can be used, however financial
accounting does use financial data from its company ( Khaadi ) main transaction-based accounting
system.
Nature:
The definition to data in management accounting is largely historical, present and forward-looking,
Whereas the source and purpose of every data has been traditionally linked in previous results of
financial accounting
4
(Dr. Suhas Mahajan, Management Accounting, 2018)
Different methods used for management accounting reporting
The different forms in accounting management systems & the function of integrating to different
structures related to Khaadi is covered. These last two management accounting systems are also
described as discussed as follows including the main criteria:
Job costing system:
It is a method for allocating production rates to every individual product while controlling costs.
Unless the products are identical, Khaadi could use this system that keeps control of an order costs.
Certain method of accounting for work expenses includes.
Receiving enquiry:
Buyers have always been confused regarding the possible value of the fabric. Its cost of both the
product as well as the time necessary to complete the Khaadi order.
Estimate price of job:
A work cost are managed by auditor of Khaadi, recognizing the wants and needs of the service
provider.
Order receiving:
Unless the cost is permitted to a purchaser, the request will also be put in Khaadi.
Production order:
To initiate a production method, a request of distribution being set.
Cost recording:
Throughout the manufacturing process, for every cost object is widely reported.
Completion of job:
Once done, the invoice is sent to the account manager for all the final cost of the job. That comparison
is based on price estimates.
Price optimizing system:
A rate optimization technique is being used to detect its prices in resources.
Use the pricing optimization configuration to simultaneously verify various sales quantities. This
technique will assist in calculating the volatility in supply at various Khaadi outlets.
By carefully observing perspectives on various sales for more than just the client group pricing,
Khaadi's specific system may now be applied.
Khaadi has also utilised this type of accounting management system, despite the fact that it will
support the business when deciding on advertising rates, genuine pricing, or cost-saving strategies.
The pricing management method aids in establishing factors like lifecycle, class targets, or
competition cost when determining prices for goods inside the Khaadi.
Cost accounting system:
That system will help the Khaadi predict a price of the product while the corporate efficiency,
5
production and cost management can be analyzed.
Its two actual cost accounting systems are often the work order costs as well as the process costs.
Their two key features of this effective cost accounting system are.
Cooperation and participation of executives required by various departments:
This will facilitate sufficient co-operation and involvement into the process of accounting that can
help direct management throughout the correct assessment of manufacturing costs.
Flexible and simple:
It should also be adaptable or simple to understand and formulate a method designed to accounting. It
should also identify numerous users i' requirements as well as adapt to Khaadi specific requirements.
Inventory management system:
Such method in accounting management system are completely compatible with about the control,
management in Khaadi also non-capitalized stocks.
Organizational processes in Khaadi.
With such a type of system can often be implemented through achieving effective stock control
within the business and by time of purchase.
The two essential elements are.
Strategies foreseen and replenished:
It helps the Khaadi control and schedule the firm expense needs in time.
Inventory management physically & monetarily:
With this, multiple advantages are achieved, like cost savings and effective supply chain management.
Different types of management accounting reports.
The multiple management accounting reports assist management in preparing appropriate
management reports that depend on the predictions to make sensible strategic decisions.
Khaadi have reliable quantitative and financial info to managers.
The different management reports and their advantages are addressed in the following paragraph.
Comments ion results: The differences measured by comparing the real results with the forecast
results are examined and data is described in the performance report. These are usually delivered per
year. Indeed,they could be designed daily or weekly in Khaadi.
Order information report:
A form data report did help the administration to even see the patterns in Khaadi quickly and
accurately. Various kinds of documents ready for such failure to report help coordinated workplace
practices to achieve decreased placement costs via tactical plan forecasting.
Khaadi situation or opportunity reports:
A statement is programmed with senior managers to recognize the specific outbreak well. Actually,
attempting to begin preparing the scenario and likelihood plan which is more excellently drafted
works to help owners to make important financial judgements about either the events or their
observation in Khaddi.
6
Evaluation of benefits of management accounting systems and their application within an
organizational context
Three benefits of management accounting system in context of Khaadi.
System
Advantages
Price optimizing system of Khaadi
(1) Khaadi may assess consumer attitudes on the
basis of different prices
(2) Helps boost operating profit at best prices
(3) This allows consumer segmentation.
(1)
Inventory Management System of Khaadi
Khaadi
use
this
system
to
address
effectiveness of all its inventory demand.
(2)
Then
this
will
increase
productivity,
efficiency and to save resources and time.
Accounting reports from the management and their integration with Khaadi.
Performance reports: Implementing such Khaadi management and leadership operations testimony
can inspire managers and serve as the cornerstone for long-term manufacturing, which can lead to
cost reductions and healthy profits even in the face of rising expenses.
Type of reporting
Integration with organizational processes
Order information report
Introducing organizational methods with Khaadi
by such monitoring can also provide a summary
to public relations order information towards
managers to produce different statistics to track
and meet customers’ order in budget.
Business situation or opportunity report
Khaadi will be able to integrate business
operations with any of these types of things.
Administrators to evaluate situations critically
and also to act on the decisions appropriately.
LO2 APPLY A RANGE OF MANAGEMENT ACCOUNTING TECHNIQUES
What is cost? & explain different types of costs?
Price relates to such money value used only to produce something and represents the monitoring of
goods, capital, actions, threats, use of time and facilities, and the ability to produce and supply the
product or service has been missed (Drury, i2013).
7
Demonstrate the specific costs as follows:
Fixed and variable costs: Fixed costs are likely costs that remain constant over a specific level of
output and do not rise or fall. As a result, just the salary rise reduces the modified value for each
unit of the same product. Rent, depreciation, and other terms have a fundamental explanation. A
variable value is just a cost that varies depending only on the variation of a certain production. It
also has a direct relationship to the market because it grows and shrinks as the level of production
changes. For instance, materials, labor, and so on.
(Weygandt, et. al., i2015).
Historical and replacement costs: This may be the sum of money pay in taxes at the time of
reservation and which is known as just a source of personal accounts. The cost of replacement is a
market value usually taxable for the trade of a resource.
Opportunity and outlay costs: Expenditure as well as real expenses are the real and actual damages
caused by Khaadi to machinery, employees, tools, etc. These expenses are described in the payment
processing but are based on the principle of accounting costs. The cost of capacity, on the other hand,
represents a cost by foregone income and select that next good option. Its value concept refers for
long-term investments or capital budgeting judgments (Novas, iet. ial., i2017).
Avoidable and unavoidable costs: The part of the price that cannot be avoided must be managed
and reduced by limiting business operations associated with certain costs, thus Khaadi by managing
those costs the manager involved The eventual cost, on the other hand, refers to costs that are
recognised as fixed costs and cannot be minimised by scaling back business operations. For
instance, perfect computer efficiency would come at a price.
Total, average and marginal costs: A title's overall cost is determined by the fact that it really
comprises a number of goods that are utilized in manufacturing. These products can be either variable
or constant, and are referred to as total costs, or they can be average costs for each product. Without
the accrual of additional unit value, the net cost or expense of a net unit generated.
Incremental and sunk cost: Incremental costs are also defined when differential costs caused by
changes well intothe level of financial operation or the essence of that same activity.
This is expressed through calculating its costs in generating units in manufacturing. Hidden expenses
were expenses who do not change the situation or remain in place Sunk cost was the part of the
accrued expense and therefore cannot been returned. Sunk costs are not important to judgmentmaking criteria since they are past cost (Manyaeva, iet. ial., i2016).
Present cost calculations to prepare an income statement using marginal and absorption costs.
Marginal costing:
Marginal costs can only be described here just for tactical judgment-making reasons as accounting
system where the variable costs are assigned to a cost unit. Nevertheless, the total contribution was
fully accounted by the fixed
expenses for the entire length (Delis, i2015).
8
This can be defined as cost for a production manufactured marginal and last unit.
It cost method is not the same as cycle costing or job costing, however it is a simple tactic for
evaluating cost information chiefly through handling efforts to determine the impact in adjustments
of manufacturing as well as level of output ion profits.
In the Pakistan, the marginal costing process is common and involves the idea of financial
contribution.
INCOME STATEMENT (absorption costing)
$
Sales
367200
(1200x306)
Less: cost of sales
0
Opening stock
0
54600
Production cost
(1400x39)
(7800)
Closing stock
(46800)
(200x39)
Gross Profit
320400
Under/over
(1000)
absorbed
overhead
(W2)
319400
Gross profit
Less
:
Non
–
Manufacturing
(160000)
Varaibale (60000)
Fixed (50000)
159400
W2
Over/under absorbed O.H
Fixed P.O.H
159000
9
16000/30000=5.3
5.3x30000=159000
160000
Actual
1000
Under absorbed
INCOME STATEMENT (marginal costing)
TOTAL
$
Sales ( 1200x 306)
367200
Less: cost of sales
0
Opening stock
Production cost (W1)
37800
(1400x27)
Closing stock
(5400)
(32400)
(200x27)
Gross Contribution
334800
Variable POH
(60000)
contribution
274800
Variable
(120000)
NON
Production
Fixed POH
(160000)
Adminand distribution
(50000)
(210000)
(55200)
Profit/loss
LIFO and FIFO
Issue
FIFO Method
LIFO Method
10
Materials
In most businesses, the actual flow of There are few businesses where the
flow
materials follows FIFO, which makes oldest items are kept in stock whiler
this a logical choice.
Inflation
newer items are sold first.
If costs are increasing, the first items If costs are increasing, the last items
sold are the least expensive, so your sold are the most expensive, so your cost
cost of goods sold decreases, you of goods sold increases, you report
report more profits, and therefore pay fewer profits, and therefore pay a
a larger amount of income taxes in the smaller amount of income taxes in the
near term.
Deflation
near term.
If costs are decreasing, the first items If costs are decreasing, the last items
sold are the most expensive, so your sold are the least expensive, so your cost
cost of goods sold increases, you of goods sold decreases, you report more
report fewer profits, and therefore pay profits, and therefore pay a larger
a smaller amount of income taxes in amount of income taxes in the near term.
the near term.
Financial
There
are
no
GAAP
or
IFRS IFRS does not all the use of the LIFO
reporting
restrictions on the use of FIFO in method at all. The IRS allows the use of
reporting financial results.
LIFO, but if you use it for any
subsidiary, you must also use it for all
parts of the reporting entity.
Record
There are usually fewer inventory There are usually more inventory layers
keeping
layers to track in a FIFO system, since to track in a LIFO system, since the
the oldest layers are continually used oldest layers can potentially remain in
up. This reduces record keeping.
the system for years. This increases
record keeping.
11
Reporting
Since there are few inventory layers, There may be many inventory layers,
fluctuations
and those layers reflect recent pricing, some with costs from a number of years
there are rarely any unusual spikes or ago. If one of these layers is accessed, it
drops in the cost of goods sold that are can result in a dramatic increase or
caused by accessing old inventory decrease in the reported amount of cost
layers.
of goods sold.
FIFO (calculation)
SCENARIO 3
A business had opening stock valuation going on. The following receipts and issues were recorded in
May:
Date
Transaction
Unit Cost
Units
£
Amount £
Purchased/(Sold)
January 1
Opening
700
10
7000
12
1200
Inventory
January 3
RECEIVE
100
January 8
ISSUE
(500)W1
January 9
RECEIVE
600
14
8400
January 15
RECEIVE
200
15
3000
January 17
ISSUSE
(400)W2
(4600)
January 27
ISSUSE
(100)W3
(1400)
January 31
Closing Inventory
600
11800
(5000)
W1
Value of sales
January 1
500x10
5000
W2
Value of sales
12
January 19
200x10
2000
January
100x12
1200
100x14
1400
4600
W3
sales value
100x14
January 27
1400
W4
Value of closing stock
January 1
January
LIFO (calculation)
SCENARIO 3
A business had opening stock valuation going on. The following receipts and issues were
recorded in May:
Date
Transaction
Units
Unit Cost
Amount
700
10
7000
12
1200
Purchased/(Sold)
January 1
Opening
Inventory
January 3
RECEIVING
100
January 8
ISSUE
(500) W1
January 9
RECEIVING
600
14
8400
January 15
RECEIVING
200
15
3000
January 17
ISSUE
(400) W2
(6200)
January 27
ISSUSE
(100) W3
(1400)
January 31
Closing Inventory
600
(5200)
14
W1
13
6800
Sales value
January
100x12
1200
January
400x10
4000
200x15
3000
200x16
3200
400x14
1400
W2
sales value
January 27
W3
Value of closing inventory
January
Standard cost overview
The standard cost is the substitution of the actual cost in the accounting records. The differences are
then recorded to show the difference between the expected costs and the actual costs. This approach
represents a simplified alternative to cost overlay systems, such as FIFO and LIFO, in which large
amounts of historical cost information must be kept for stock items in stock.
Standard cost variance
The variance is the difference between the actual cost and the standard cost at which it is measured. A
difference can also be used to measure the difference between actual sales and expected sales. Thus,
analysis of variance can be used to analyze income and expenditure performance.
SALES PRICE VARIANCE
Actual quantity x actual price – actual quantity x standard price
230 x 300
–
230 x 357
69000
–
82110
13110 (A)
SALES VOLUME PROFIT VARIANCE
Actual quantity x standard price – standard quantity x standard profit
–
230 x 63
–
14490
14
200 x 63
12600
1890 (F)
SALES QUANTITY VARIANCE
Actual quantity x standard price – standard quantity x standard price
–
230 x 357
200 x 357
–
82110
71400
107010 (F)
DIRECT MATERIAL RATE VARIANCE
Actual quantity x actual rate – actual quantity x standard rate
–
230 x 104
230 x 63
–
23920
14490
9430 (A)
MATERIAL EFFICIENCY VARIANCE
Actual quantity x standard price – standard quantity x standard price
230 x 63
–
200 x 63
14490
–
12600
1890 (A)
DIRECT LABOUR EFFICIENCY VARIANCE
Actual hours x standard rate – standard hours x standard rate
230 x 63
–
14490
–
158 x
63
9954
4536
(F)
DIRECT LABOUR RATE VARIANCE
Actual hours x actual rate – actual hours x standard rate
–
230 x 104
230 x 63
–
14490
14490
9430 (A)
V.P.O.H VARIANCE
Actual fixed O.H – budgeted fixed O.H
10,000
–
15
18900
8900 (F)
Reconciliation of actual profit with budgeted profit.
$
$
$
000
000
000
FAV
Adv
8300
Budgeted profit
Sales volume profit variance
10710
Sales price variance
(13110)
Material price
(9430)
Material usage price
(1890)
labor rate
efficiency
2400
Fixed OH
8900
Total
22010
(24430)
(2420)
5880
Actual Profit /Loss
RECOMMENDATION:
Do the review only if there seems to be a clear case of huge costs.
Investigate its analysis except in areas under which long-term costs are also not expected to change
significantly (such as administrative functions)
Carry out the study for purchased businesses to know regarding their cost structures and finish any
furtherresearch.
LO3 EXPLAIN THE USE OF PLANNING TOOLS USED IN MANAGEMENT
ACCOUNTING
Explain the advantages and disadvantages of different types of planning tools used for
budgetary control
In business enterprises, budgeting tools were used to handle, plan or predicted its budget of the
products or services, that is then introduced and tried to achieve targeted goals and results.Budget
improves to facilitate the planning of operations by pushing managers to recognize how
16
circumstances could change or what steps must be taken now and empowering managers to consider
issues before they occur. This also helps to arrange the Khaadi activities by convincing managers to
look at interactions from their own operations from those of other departments.
Advantages
Disadvantages
Coordinates activities across Khaadi
There is a major problem with the Khaadi
Departments of budgets
Mechanical and rigid application
Translate into action strategic plans.
May discourage workers in Khaadi because of
sudden loss of interference
They specify the assets, revenues or tasks needed
If the plans were implemented Khaadi the
to support the growth strategy wrongly in
workers will not of the expense budgeted and
Khaadi know the reason.
will not agree.
Provide a good record of logistical actions in
May contribute to perception of Khaadi would
disparity in Khaadi helps to improve employee
straggle for money and Khaadi. A restrictive
communication in politics in Khaadi improve
budgetary system levels of ambition or creativity
distribution of resources by explaining eliminate
almost impossible for receive money on new
low and justifying all inquiries in Khaadi making
ideas in Khaadi
it.
Provide re allocation framework for corrective
measures in Khaadi (unknown, 2017; Michale,
2018)
Some methods that could be used in a structured/

Budgeting

Cash Flow Forecasting
Budgeting: (Michale, 2018)
When Khaadi know that plans for the future should mean, Khaadi would have to determine when
to finance these plans preparing a plan is a necessary means of keeping the costs under control.
Cash Flow Forecasting:
Thus, financial planning is such a valuable resource, a cash flow forecast is much more relevant in
terms with its definition
It helps the business owner like Khaadi to identify bank finance peaks. A forecast of cash flow
(“again if properly prepared”) can help identify the limitations to handle growth. Different types of
Budgeting that is undertaken in a Khaadi are as follows: Khaadi financial budget applies towards
calculating the summary of revenue, an assets and liabilities as well as the statement of income
17
towards coming years.Corporate Budgeting makes reference to a planning and implementation of
such a Khaadi financial budgets on its operations.Cash budget leads to estimating for such a set period
of time all expected money transactions & cash payments of the a Khaadi.
Forecasting Techniques:
1.Qualitative Forecast:

Based upon the assessment, its contributions to that of the forecasting system were collected
across individual departments and different Khaadi workers.

It utilizes a methodology outlined that obtain avoiding prejudice the predictions of
experienced staff / executives in Khaadi
2.Time Series Forecast:

It requires monitoring some particular factor in Khaadi through duration or creating
forecasting programs based onto the variable's predicted motion throughout the upcoming
cycle.

The technique becomes helpful in Khaadi to research variables including repeated trends or
seasonality with / without.
3.Causal Forecast:

Some factors which cause motion in Khaadi factor were studied across time throughout this
system.

Examination of regression is really the best system of causal forecasting In Khaadi.
TWO FINANCIAL PROBLEMS FACED BY The BUSINESS AND SLOUTION TO THOSE
PROBLEMS.
Budgeting Problems: They may also have problems with budgeting unless they constantly run out
of money before even the month runs out and they find themselves having to rely on credit cards to
meet objectives. They think about what they earn and wonder how, even though they earn a decent
salary, it does not seem to
have been enough to pay the bills. It may also have a written plan it tries
to follow every month, but it never appears to work. This is a major indicator which has a problem
with budgeting.
Create a Budget: When they don't have one yet, begin to create a budget. Its simplest way to do that
is to point a finger at and modify than what they spent last month from each category. Widely known
categories of budget include:

Accommodation (rent or mortgage)

Resources
18

Saving (emergency fund, retirement fund and sinking fund)

Utilities Insurance (auto, health, and life)

Medical care

Transportation (car payment and/or commuting expenses)

Debt service (credit cards, personal loans, home equity loans, and other credit accounts)

Health care

Groceries Discretionary spending (entertainment, dining out, and "extras")
Most of the costs are fixed. During a month, they continue to operate the same. Others could
fluctuate other than the control — use costs may vary from season to season, or the childcare
provider may have increased their rates. Some are still under the power, eg discretionary
expenditure as well as grocery stores. If they have to spend very little on these stuffs.
Track the Spending and Adjust as Necessary.
Attach all the categories which they have listed in the budget. Unless the total is more than their
quarterly give- home pay, they get some tweaking to do. Somewhere, usually from such expenditures
they have control under, they will have to cut. When possible, they do not want to spend very little on
the savings and otherwise debt service.
Recognizing that it would be flexible seems to be the key to making the budget work. They could still
take the money out of one category that can be used in another category unless they spend too much.
Like, they could spend some money on festival tickets, and then they'll have to change the fund to
cover that additional amount they spend in either the entertainment / discretionary category.
Case study: Financial management and business success – A guide for entrepreneur’s management
Financing goals to solve the problems are explained in D3.
LO 4 Compare the organizations are adapting management accounting systems to response to
financial problems
Using benchmarks, financial and non-financial key performance indicators, & budgetary
targets to identify financial problems and financial variances. Explain by using benchmarks and
budgeting targets help identify financial problems and financial variances.
Enterprise advances have emerged over the past few decades, whereby data is now seen as the most
public resource of analyzing the Honda and Toyota stock price, acknowledging the financial
problems associated with either the disparities discovered in the standardized range of performance
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indicators.
All of this reflected with the use of numerous leadership analysis strategies which set the
benchmarks, use financial / non-financial result indicators that analyze the performance of the Honda
and Toyota illustrating what it focuses on both the long-term profitability aspect.
Use of such budgetary control throughout the design and implementation of its multiple business
tasks of Honda & Toyota should allow the organization and keep the expectations for both the chosen
data in order to meet the firm's objectives. (Parmenter, i2015).
Key performance metrics are financial and non-financial factors used by most businesses like Honda
and Toyota that demonstrate progress in achieving lengthy-term goals.
Some of them will be listed below:
Financial Indicators:
Basis
Liquidity, Solvency, Debt Ratio
Key Performance
Responses or use in identify
indicators
financial problems and variances
Current Ratio
Indicates payment ability.
Short-term debts ion short-term
assets in Honda and Toyota.
Quick ratio
Adequacy in assets for quickterm debt in Honda andToyota
Working capital
The skill of the Honda and
Toyota.to stay solvent once the day
to day criteria are available.
Debt to equity
A capital structure Honda and
Toyota indicates the proportion of
equity debt which is only like to
finance assets.
Profitability ratios
Accounts payable to
Percentage or accounts payable at
inventoryGross profit
the stage of both. The Honda and
margin
Toyota
Inventory (Parameter, 2015).
Selling cost Administrative
Both
Honda
and
Toyota
cost, Total operating cost
percentage left paying its working
costs and to make a profit.
Net profit margin
Like to set benchmarking targets
and budgeting in Honda and Toyota
Revenue ratios
Sales
Indicates the both Honda and
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Toyota net income.
Include monitoring in part of
Calculation of revenue through a
CRM system that provides the
information required to influence it
in Honda & Toyota.
(Bai & Sarkis, i2014).
Sales growth
Assessment and advancement of
industry innovation.
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Non-financial indicators:
Management of human resources
Employees of Honda and Toyota also began to look like some kind of major asset throughout today's
world but recognize this as an important element to ensuring that company's success. Which comprises
turnover for workforce, percent in approved job opportunities, suitability studies, etc.
(Podgorski, i2015).
Product and service quality
Its been found that perhaps the issues identified in the both Honda and Toyota product reliability of
the firms get a long-term effect in its sustainability or natural consequences in customer.
Brand awareness and company profile
Its scope of both the brand as well as industry profile can also be their long-term success, growth.
Should include measures like wide allegiance, acknowledgement, performance but also characteristics
of a trademark and product.
(Bai & Sarkis, i2014).
Analyse how in response to financial problems management accounting can lead organizations
to sustainable success
The role of management accounting in sustainable success of a business organization can be
summarized in points discussed below:
Financial contorts points

The managers will be required to support the strategic and sustainable goals with the
strategies and policies to be developed Honda and Toyota.

Management accounting tools and techniques like marginal costing, standard costing, break
analysis etc. will help Honda and Toyota in integration of sustainable matters into the various
decision-making processes.

Management accounting helps in the production of Honda and Toyota reports that include
information ion sustainability impacts which will help in understanding pricing and budgeting
decisions and strategic planning.

Honda and Toyota Management Helps in development of reporting strategy that will
integrate sustainability issues which in turn will allow reporting of financial and non-financial
information.
By developing effective strategies and systems which require effective and timely reporting,
which also requires disclosure of all financial positions that are governed and owned
responsibly by those who hold them Honda and Toyota.
Strategic planning works with those of the development and business strategy decisions onto the
types of markets, industries where the company operates which involves competitive market
22
performance decisions. Thus, strategic planning utilizes financial data from multiple frameworks e.g.
costing, financial planning, performance processes and other internally and externally organizational
sources (Noordin, et. al., 2017).
Company auditors from Honda and Toyota. These techniques can be implemented using different
techniques usingplanning as well as control systems mentioned below.
Budgeting systems:
Similar programs have to be linked to long-term budget development strategies which can sustain
organizational tactics.
Performance measurement systems:
This could be used to correlate actual results to relevant expenditures or various certain goals that rely
on organizational policies. (Rothaemal, i2015).
Rules governing banks, investment firms, and insurance firms were also financial regulations. They
protect you against financial risk and fraud of Honda and Toyota.
Law is an issue if it inhibits its free market. That’s the most efficient way to set prices. It increases
business efficiency as well as reduces buyers ' costs. It distorted the economy by wage price controls
in the 1970s which induced stagflation.
Regulations can dampen economic growth. Rather than investing in factories, machinery, even assets,
businesses need to use their resources to follow federal law laws. Such rules complement its Financial
Regulations and have been limited by them.
LO3&4
Devaluate how planning tools for accounting respond appropriately to solving financial
problems to lead organizations to sustainable success
50% within five years, start-ups fail (OECD, Entrepreneurship at a Glance, 2015) 36% Inadequate
financial management is responsible for business failures
Turnaround Management Society 2014
Different strategy methods assist managers recognize financial challenges for both financial
management tools and techniques.
Its information collected from these techniques in preparing sort of takes tactical moves as well as
investment decisions which can cause to a success of both the organization. A method will be
intended to implement tracking or even decisions could be taken properly.
Review as well as interpretation in financial data may help to external reporting, that in turn can
ensure sustainable growth for both the company. The business will have a significant impact in its
climate issues with both the implementation of planning techniques.
Management accounting as closely connected with different levels in preparation, decisions
throughout the waydescribed below:
Planning and controlling: This would be the key component in management accounting, as well as
Honda and Toyota can adopt plans to build the path both the firm as well as the control unit to make
23
sure that some operations are conducted to accordance with those of the plans (Manyaeva, et. al.,
i2016).
Implementing plans: Management teams are now using planning techniques and collect essential
information on even a daily basis, eg forecasts, performance ratings products cost, to meet the goal
set during budget process. This really allows that management at Honda and Toyota should assign of
each process as per the needs on each unit or department.
Competitive edge: Would see that, through both the strategies and goals, the excellently run
businesses focus on building the competitive advantage of both the business. A business develops a
strategy through the use of accounting to management strategies strive to achieve the competitive
market added benefit and therefore maintain low cost and product image. (Rothaemal, i2015).
Those are protecting you toward financial risk as well as fraud. But they have to be balanced by the
need to allow the efficient operation of capitalism. Financial strength. That you are going to need to
make sure you can learn how to deal like your business will be less successful financially than you
assume, or if you face a sudden one-off cost.
Financing cost. They would like to reduce financing costs, whether it really requires the interest you
pay or even the share of the company you abandon for funding.
Financial flexibility. For e.g., the company should always be flexible so that you can get extra funds
to help you seeknew future opportunities.
Business control. You're going to have to maintain market leverage, including creditors and
investors having as few constraints as feasible about what you can do; and now you're going to want
to limit their right to a part in decision making.
Financial risk. That you are going to have to restrict that personal financial risk as well as the risks
towards any family and friends which have invested in the company, reducing the risk of losing as
much as you can handle when things go bad.
Personal finances. Any investment strategies will consider the amount of business income that need
and the degree in which you are prepared to reduce the income to reinvest throughout the business.
Business strategy. The ability to generate funding can decide how much you can afford to invest in
development, as well as whether you have to concentrate on cost control and cash generation.
Conclusion:
It can include a fact that various management accounting methods and methods help a company to
obtaining as well as retrieving its information essential for the company managers to perform their
duties. Honda and Toyota may very well adapt & integrate such methods but also strategies for the
sustainability & growth throughout the manufacturing industry therefore generates decision-making
leaders of data-driven insights as well as allows that reliability for decisions to also be enhanced.
Using marginal costs and absorption costs also helps companies to plan financial statements that
reflect to customer priorities Implementing specific management accounting tools, frameworks helps
managers towards good business techniques, plans which can focus from both long-term
24
sustainability of the business whilst maintaining profitability as well as success. so, it allows an
organization could prepare various financial reports onto the basis of reliable information, which will
in turn ensures the firm's examination, quality of legalities and strategy.
25
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The report of the international company and they follow those accounting systems
https://www.sec.gov/Archives/edgar/data/320187/000032018718000142/nke-5312018x10k.htm
https://www.bloomberg.com/profile/company/TFCOZ:JP
Honda financial report Please follow the link.
https://www.atlashonda.com.pk/financial-reports/
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