Management Accounting

Overall requirement * Explain how management accounting can supply information to assist the management of the organisation. * You are not required to investigate and report on the organisation’s actual management accounting system (even if you can find out). * You are to write a 1500 word report as though you were a management consultant writing to the board of directors. * WE DO NOT WANT ANY NUMBERS UNLESS YOU CREATE THEM TO DEMONSTRATE AN IDEA * This is like assessment 1a – you are to imagine and create! This is a report * It has an introduction A main body (see the next slides) * A conclusion How your marks will build up * Background to the organisation showing good reading of appropriate sources 25% * Review of the nature and role of management accounting 10% * An analysis of the organisation, showing its information needs, the management accounting techniques it might use and decisions it could then make. 50% * The strengths and weaknesses of your analysis  œ for example the additional information you would have liked in order to improve your analysis. 15% Background to the organisation The reason for this is to introduce your organisation (briefly) and to show what a manager in this organisation will do. Later you will show how m. a. helps. * A manager will make decisions about the organisation’s products, processes etc. – therefore your introduction will cover this. * This introduction will reveal the kind of problems that your organisation faces and must overcome. * We do not want the history of the organisation and any information that you will not use later. * Choose your organisation carefully – one that you can understand. You need to be able to imagine the kinds of decisions that a manager might make. Review of the nature and role of management accounting * A definition (with reference) * Some idea of what management accounting does and what it does not do. * Some examples of the techniques and methods of m. a. * You have been studying this since week 5 and so it should not be a problem * DO NOT TRY TO BE TOO CLEVER. IN PREVIOUS YEARS STUDENTS HAVE MENTIONED ABC, JUST IN TIME AND THROUGHPUT ACCOUNTING. Do not do this as you probably do not understand these techniques and will only show that this is so. Keep to what you know! An analysis of the organisation, showing its information needs, the management accounting techniques it might use and decisions it could then make. * This is the hard part that attracts the most marks * You are to link part 1 and part 2 – you organisation’s needs to the techniques and methods of management accounting * What does m. a. Do that will help this organisation? * How can it improve processes? * How can it compete better? * How can it choose between products? * How can it use m. a. for pricing? Planning, controlling, motivating, organising etc * Difficult – but you are applying what you have learned to the problems of the organisation. The strengths and weaknesses of your analysis * This was badly done in assessment 1b * WE DO NOT WANT THE S&W OF THE COMPANY * What aspects of your analysis are strong. Where do you feel that your recommendations are strong and secure? Give examples. * Where do you feel your recommendations are weak perhaps due to lack of information about the company or lack of your knowledge and experience of management accounting. Give examples. Management Accounting Use the following to answer question 1: Marger, Inc. , provided the following data for two recent months: [pic] |1. |Which of the following classifications best describes the behavior of Cost T? | |A) |Variable | |B) |Fixed | |C) |Mixed | |D) |None of the above | 2. |The following data pertains to activity and maintenance costs for two recent years: | | | | | |[pic] | | |Using the high-low method, the cost formula for maintenance would be: | |A) |$1. 50 per unit. | |B) |$1. 25 per unit. | |C) |$3,000 plus $1. 50 per unit. | |D) |$6,000 plus $0. 75 per unit. | |3. Rible Company has observed that at an activity level of 8,000 units the cost for maintenance is $15,000, and at 10,000 units the| | |cost for maintenance is $16,500. Using the high-low method, the cost formula for maintenance is: | |A) |$15,000 plus $0. 15 per unit. | |B) |$9,000 plus $0. 75 per unit. | |C) |$1. 65 per unit. | |D) |$1. 875 per unit. | |4. |Which of the following types of firms likely would have a high pr oportion of variable costs in its cost structure? | |A) |Public utility. | |B) |Airline. | |C) |Fast food outlet. |D) |Architectural firm. | |5. |Factory overhead is an example of a: | |A) |mixed cost. | |B) |fixed cost. | |C) |variable cost. | |D) |irrelevant cost. | Use the following to answer question 6: Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and cost structure follow: [pic] |6. |If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be: | |A) |$30,750. |B) |$74,250. | |C) |$26,750. | |D) |$96,500. | Use the following to answer question 7: Frank Company operates a cafeteria for its employees. The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria are given below: [pic] Assume that the relevant range includes all of the activity levels mentioned in this problem. |7. |Using the high-low method of analysis, the variable cost per mea l served in the cafeteria would be estimated to be: | |A) |$1. 50. | |B) |$2. 0. | |C) |$2. 80. | |D) |$1. 00. | Use the following to answer question 8: Stewart Company is attempting to classify costs according to their cost behavior. Data concerning activity and costs are listed below: [pic] |8. |If Stewart Company sells 1,150 units in March and this activity is within the relevant range, the expected total cost would most| | |likely be closest to: | |A) |$2,610. 50. | |B) |$1,774. 00. |C) |$4,343. 92. | |D) |$4,384. 50. | |9. |A disadvantage of the high-low method of cost analysis is that: | |A) |it cannot be used when there are a very large number of observations. | |B) |it is too time consuming to apply. | |C) |it uses two extreme data points, which may not be representative of normal conditions. | |D) |it relies totally on the judgment of the person performing the cost analysis. | Use the following to answer question 10: Marger, Inc. provided the following data for two recent months: [pic] |10. |Which of the following classifications best describes the behavior of Cost U? | |A) |Variable | |B) |Fixed | |C) |Mixed | |D) |None of the above | |11. |Fox Company's contribution margin ratio is 20%. If the degree of operating leverage is 15 at the $225,000 sales level, net | | |operating income at the $225,000 sales level must equal: | |A) |$2,250. | |B) |$6,750. | |C) |$3,000. | |D) |$5,063. | |12. |Korn Company sells two products, as follows: | | | | | |[pic] | | |Fixed expenses total $300,000 annually. The expected sales mix in units is 60% for product Y and 40% for product Z. How much is | | |Korn's expected break-even sales in dollars? | |A) |$300,000 | |B) |$420,000 | |C) |$475,000 | |D) |$544,000 | |13. |Brown Company has sales of 2,000 units at $70 per unit. Variable expenses are 40% of the selling price. If total fixed expenses | | |are $44,000, the degree of operating leverage is: | |A) |0. 79. | |B) |1. 40. | |C) |3. 50. | |D) |2. 10. | Use the following to answer question 14: Budget data for the Bidwell Company are as follows: [pic] |14. |If fixed expenses increased $31,500, the break-even sales in units would be: | |A) |34,500 units. | |B) |80,500 units. | |C) |69,000 units. | |D) |94,500 units. Use the following to answer question 15: Evergreen Corp. has provided the following data: [pic] |15. |The number of units needed to achieve a target net operating income of $49,500 would be: | |A) |1,238 units | |B) |2,750 units. | |C) |3,200 units. | |D) |2,057 units. | Use the following to answer question 16: A manufacturer of premium wire strippers has supplied the following data: [pic] |16. The company's degree of operating leverage is closest to: | |A) |20. 09 | |B) |7. 73 | |C) |1. 86 | |D) |55. 64 | Use the following to answer question 17: Consider the following budgeted data f or Urqhart Corporation: [pic] |17. If the unit contribution margin is increased by 10%, the total fixed expense is decreased by 20%, and all other data remain as | | |in the budget, net operating income will be: | |A) |$102,500. | |B) |$105,000. | |C) |$ 90,000. | |D) |$ 93,750. | Use the following to answer question 18: The costs of publishing a grade school textbook can be assumed to be as follows: [pic] Each book sells for $10 per copy. |18. |The unit contribution margin for each copy of the book is: | |A) |$5. 5. | |B) |$4. 15. | |C) |$5. 40. | |D) |$7. 15. | |19. |If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative | | |to its previous position will: | |A) |shift downward and have a steeper slope. | |B) |shift downward and have a flatter slope. | |C) |shift upward and have a flatter slope. | |D) |shift upward and have a steeper slope. | Use the following to answer question 20: A company that makes organic fertilizer has supplied the following data: [pic] |20. |The company's degree of operating leverage is closest to: | |A) |3. 50 | |B) |1. 49 | |C) |9. 54 | |D) |2. 41 | |21. Trumbull Company budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Collection | | |experience indicates that none of the budgeted sales will be collected in the month of the sale, 60% will be collected the month| | |after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be| | |budgeted for September would be: | |A) |$169,800. | |B) |$147,960. |C) |$197,880. | |D) |$194,760. | Use the following to answer question 22: Young Enterprises has budgeted sales in units for the next five months as follows: [pic] Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory on May 31 fell short of t his goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. |22. |The desired ending inventory for August is: | |A) |540 units. |B) |680 units. | |C) |720 units. | |D) |380 units. | Use the following to answer question 23: Balmforth Products, Inc. makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next five months is as follows: [pic] The company wants to maintain monthly ending inventories of Material A equal to 20% of the following month's production needs. On January 31, this target had not been attained since only 2,000 yards of Material A were on hand. The cost of Material A is $0. 80 per yard. The company wants to prepare a Direct Materials Purchases Budget. |23. |The desired ending inventory of Material A for the month of March is: | |A) |9,300 yards. | |B) |7,140 yards. | |C) |3,100 yards. | |D) |8,400 yards. | Use the following to answer question 24: The Gomez Company, a merchandising firm, has budgeted its activity for December according to the following information: * Sales at $500,000, all for cash. * Merchandise Inventory on November 30 was $250,000. * The cash balance at December 1 was $20,000. Selling and administrative expenses are budgeted at $50,000 for December and are paid for in cash. * Budgeted depreciation for December is $30,000. * The planned merchandise inventory on December 31 is $260,000. * The cost of goods sold represents 75% of the selling price. * All purchases are paid for in cash. |24. |The budgeted cash receipts for December are: | |A) |$125,000. | |B) |$375,000. | |C) |$530,000. | |D) |$500,000. | Use the following to answer question 25: Young Enterprises has budgeted sales in units for the next five months as follows: [pic] Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. |25. |The beginning inventory in units for September should be: | |A) |460 units. | |B) |6,800 units. | |C) |540 units. | |D) |680 units. | Use the following to answer question 26: May Company, a merchandising firm, has budgeted sales as follows for the third quarter of the year: [pic] Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $65,000. The company is now preparing a Merchandise Purchases Budget. |26. |The desired beginning inventory for September is: | |A) |$117,000. |B) |$ 76,050. | |C) |$ 91,000. | |D) |$ 59,150. | Use the following to answer question 27: Smith Company makes and sells a single product called a Pod. Each Pod requires 1. 4 hours of labor at a labor rate of $9. 60 per hour. Smith Company needs to prepare a Direct Labor Budget for the second quarter of the year. |27. |The budgeted direct labor cost per Pod would be: | |A) |$13. 44. | |B) |$9. 60. | |C) |$7. 38. | |D) |$11. 00. | |28. Self-imposed budgets typically are: | |A) |not subject to review by higher levels of management since to do so would contradict the participative aspect of the | | |budgeting processing. | |B) |not subject to review by higher levels of management except in specific cases where the input of higher management is | | |required. | |C) |subject to review by higher levels of management in order to prevent the budgets from becoming too loose. | |D) |not critical to the success of a budgeting program. |29. |Shocker Company's sales budget shows quarterly sales for the next year as follows: | | | | | |[pic] | | |Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. | | |Budgeted production for the second quarter of the next year would be: | |A) |7,200 units. |B) |8,000 units. | |C) |8,800 units. | |D) |8,400 units. | |30. |The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24 dollars and has a unit | | |variable cost of $18. The company has budgete d the following data for November: | | | | | | | | |* Sales of $1,152,000, all in cash. | | | | | | | |* A cash balance on November 1 of $48,000. | | | | | | | | |* Cash disbursements (other than interest) during November of $1,160,000. | | | | | | | |* A minimum cash balance on November 30 of $60,000. | | | | | | | | |If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at | | |2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during | | |November. | | | | | |The amount of cash that must be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 | | |cash balance is: | |A) |$20,000. | |B) |$21,000. | |C) |$37,000. | |D) |$38,000. | Use the following to answer question 31: The following materials standards have been established for a particular product: pic] |31. |What is the materials quantity variance for the month? | |A) |$1,740 U | |B) |$4,350 U | |C) |$4,590 U | |D) |$1,836 U | Use the following to answer question 32: The following standards for variable manufacturing overhead have been established for a company that makes only one product: pic] |32. |What is the variable overhead spending variance for the month? | |A) |$3,010 F | |B) |$3,010 U | |C) |$10,435 U | |D) |$10,435 F | Use the following to answer question 33: The following materials standards have been established for a particular product: [pic] |33. What is the materials quantity variance for the month? | |A) |$5,050 U | |B) |$5,125 U | |C) |$9,292 U | |D) |$9,430 U | Use the following to answer question 34: Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product. [pic] During May, Arrow purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Arrow manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor hours. |34. |The direct material price variance for May is: | |A) |$16,000 favorable. |B) |$16,000 unfavorable. | |C) |$14,250 favorable. | |D) |$14,250 unfavorable. | |35. |Perkins Company, which has a standard cost system, had 500 pounds of raw material X in its inventory at June 1, purchased in May| | |for $1. 20 per pound and carried at a standard cost of $1. 00 per pound. The following information pertains to raw material X for | | |the month of June: | | | | |[pic] | | |The unfavorable materials purchase price variance for raw material X for June was: | |A) |$ 0. | |B) |$130. | |C) |$140. | |D) |$150. | |36. |If variable manu facturing overhead is applied on the basis of direct labor-hours and the variable overhead spending variance is | | |favorable, then the: | |A) |actual variable manufacturing overhead rate exceeded the standard rate. |B) |standard variable manufacturing overhead rate exceeded the actual rate. | |C) |actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output. | |D) |standard direct labor-hours allowed for the actual output exceeded the actual hours. | Use the following to answer questions 37-38: The Odle Company makes and sells a single product called a Kitt. Odle employs a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0. 9 direct labor hours at $15 per hour. There were no inventories of any kind on June 1. During June, the following events occurred: – Purchased 17,000 pounds of material at a total cost of $190,000. – Used 15,000 pounds of material to produce 2,400 Kitts. – Used 1,900 hours of direct labor time at a total cost of $38,000. |37. |To record the incurrence of direct labor cost and its use in production, the general ledger would include what kind of entry to | | |the Labor Rate Variance account? | |A) |$ 9,500 credit. | |B) |$ 9,500 debit. | |C) |$15,200 debit. | |D) |$ 2,000 debit. | |38. |Odle Company purchased material on account. The entry to record the purchase of materials will include a: | |A) |credit to Work in Process. | |B) |debit to Accounts Receivable. | |C) |credit to Accounts Payable. | |D) |credit to Raw Materials Inventory. | Use the following to answer question 39: The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The following data are for the month of August: – Actual cost of direct material purchased and used: $65,560 – Material price variance: $5,960 unfavorable – Total materials variance: $22,360 unfavorable – Standard cost per pound of material: $4 Standard cost per direct labor hour: $5 – Actual direct labor hours: 6,500 hours – Labor efficiency variance: $3,500 favorable – Standard number of direct labor hours per unit of Roff: 2 hours – Total labor variance: $400 unfavorable |39. |The labor rate variance was: | |A) |$3,900 favorable. | |B) |$3,900 unfavorable. | |C) |$3,100 unfavor able. | |D) |$3,100 favorable. | |40. |Home Company manufactures tables with vinyl tops. The standard material cost for the vinyl used per Type-R table is $7. 80 based | | |on six square feet of vinyl at a cost of $1. 30 per square foot. A production run of 1,000 tables in January resulted in usage of| | |6,400 square feet of vinyl at a cost of $1. 20 per square foot, a total cost of $7,680. The quantity variance resulting from the | | |above production run was: | |A) |$120 favorable. | |B) |$480 unfavorable. | |C) |$520 unfavorable. | |D) |$640 favorable. | Use the following to answer question 41: The Chase Company has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor-hours (DLHs). The company recorded the following activity and cost data relating to manufacturing overhead for October: [pic] |41. |The fixed overhead budget variance for September was: | |A) |$2,700 favorable. | |B) |$2,700 unfavorable. | |C) |$5,400 favorable. | |D) |$5,400 unfavorable. | Use the following to answer question 42: A furniture manufacturer has a standard costing system based on machine-hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: [pic] |42. What was the fixed overhead budget variance for the period to the nearest dollar? | |A) |$2,440 F | |B) |$1,200 U | |C) |$1,999 U | |D) |$704 F | Use the following to answer question 43: A manufacturing company has a standard costing system based on direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: [pic] |43. |How much overhead was applied to products during the period to the nearest dollar? | |A) |$79,118 | |B) |$76,035 | |C) |$77,440 | |D) |$80,145 | Use the following to answer question 44: The Chase Company has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor-hours (DLHs). The company recorded the following activity and cost data relating to manufacturing overhead for October: [pic] |44. |The amount of fixed overhead cost contained in the company's overhead budget for September was: | |A) |$45,900. | |B) |$54,768. | |C) |$49,920. | |D) |$47,703. | |45. |Baxter Corporation's master budget calls for the production of 5,000 units of its product monthly. The master budget includes | | |indirect labor of $144,000 annually; Baxter considers indirect labor to be a variable cost. During the month of April, 4,500 | | |units of product were produced, and indirect labor costs of $10,100 were incurred. A performance report utilizing flexible | | |budgeting would report a spending variance for indirect labor of: | |A) |$1,900 unfavorable. | |B) |$700 favorable. | |C) |$1,900 favorable. | |D) |$700 unfavorable. | Use the following to answer question 46: Wicks Company has established a flexible budget for manufacturing overhead based on direct labor-hours. Budgeted costs at 100,000 direct labor-hours are as follows: [pic] |46. |If Wicks Company plans to operate at 90,000 direct labor-hours during the next period, the flexible budget would show indirect | | |labor costs of: | |A) |$144,000. | |B) |$63,000. | |C) |$90,000. | |D) |$81,000. | Use the following to answer questions 47-48: The Steff Company has the following flexible budget (in condensed form) for manufacturing overhead: [pic] The following data concerning production pertain to last year's operations: – The company used a denominator activity of 15,000 direct labor-hours to compute the predetermined overhead rate. – The company made 6,850 units of product and worked 14,200 actual hours during the year. – Actual variable overhead was $15,904 and actual fixed overhead was $30,850 for the year. – The standard direct labor time is two hours per unit of product. |47. The fixed overhead budget variance was: | |A) |$3,450 unfavorable. | |B) |$3,450 favorable. | |C) |$850 unfavorable. | |D) |$1,200 favorable. | |48. |The fixed element of the predetermined overhead rate was (per DLH): | |A) |$4. 15. | |B) |$3. 00. | |C) |$2. 00. | |D) |$1. 15. | Use the following to answer question 49: Barrick Company has established a flexible budget fo r manufacturing overhead based on direct labor-hours. Total budgeted costs at 200,000 direct labor-hours are as follows: [pic] |49. |At an activity level of 170,000 direct labor-hours, the flexible budget for factory overhead would show the budgeted amount for | | |utilities as: | |A) |$ 85,000. | |B) |$140,000. | |C) |$160,000. | |D) |$100,000. | Use the following to answer question 50: The Steff Company has the following flexible budget (in condensed form) for manufacturing overhead: [pic] The following data concerning production pertain to last year's operations: – The company used a denominator activity of 15,000 direct labor-hours to compute the predetermined overhead rate. – The company made 6,850 units of product and worked 14,200 actual hours during the year. – Actual variable overhead was $15,904 and actual fixed overhead was $30,850 for the year. – The standard direct labor time is two hours per unit of product. |50. |The fixed overhead cost applied to work in process was: | |A) |$27,400. | |B) |$30,000. | |C) |$30,850. | |D) |$13,700. | Management Accounting Overall requirement * Explain how management accounting can supply information to assist the management of the organisation. * You are not required to investigate and report on the organisation’s actual management accounting system (even if you can find out). * You are to write a 1500 word report as though you were a management consultant writing to the board of directors. * WE DO NOT WANT ANY NUMBERS UNLESS YOU CREATE THEM TO DEMONSTRATE AN IDEA * This is like assessment 1a – you are to imagine and create! This is a report * It has an introduction A main body (see the next slides) * A conclusion How your marks will build up * Background to the organisation showing good reading of appropriate sources 25% * Review of the nature and role of management accounting 10% * An analysis of the organisation, showing its information needs, the management accounting techniques it might use and decisions it could then make. 50% * The strengths and weaknesses of your analysis  œ for example the additional information you would have liked in order to improve your analysis. 15% Background to the organisation The reason for this is to introduce your organisation (briefly) and to show what a manager in this organisation will do. Later you will show how m. a. helps. * A manager will make decisions about the organisation’s products, processes etc. – therefore your introduction will cover this. * This introduction will reveal the kind of problems that your organisation faces and must overcome. * We do not want the history of the organisation and any information that you will not use later. * Choose your organisation carefully – one that you can understand. You need to be able to imagine the kinds of decisions that a manager might make. Review of the nature and role of management accounting * A definition (with reference) * Some idea of what management accounting does and what it does not do. * Some examples of the techniques and methods of m. a. * You have been studying this since week 5 and so it should not be a problem * DO NOT TRY TO BE TOO CLEVER. IN PREVIOUS YEARS STUDENTS HAVE MENTIONED ABC, JUST IN TIME AND THROUGHPUT ACCOUNTING. Do not do this as you probably do not understand these techniques and will only show that this is so. Keep to what you know! An analysis of the organisation, showing its information needs, the management accounting techniques it might use and decisions it could then make. * This is the hard part that attracts the most marks * You are to link part 1 and part 2 – you organisation’s needs to the techniques and methods of management accounting * What does m. a. Do that will help this organisation? * How can it improve processes? * How can it compete better? * How can it choose between products? * How can it use m. a. for pricing? Planning, controlling, motivating, organising etc * Difficult – but you are applying what you have learned to the problems of the organisation. The strengths and weaknesses of your analysis * This was badly done in assessment 1b * WE DO NOT WANT THE S&W OF THE COMPANY * What aspects of your analysis are strong. Where do you feel that your recommendations are strong and secure? Give examples. * Where do you feel your recommendations are weak perhaps due to lack of information about the company or lack of your knowledge and experience of management accounting. Give examples. Management Accounting Running Head: MANAGEMENT ACCOUNTING The Management Accountant in Business [Name of the Writer] [Name of the Institution] The Management Accountant in Business Introduction Tesco Public Limited Company is a merchandising retailer and a grocery retailer multinational chain which has it’s headquarter in Cheshunt in the United Kingdom. Tesco as compared to its counterparts, Walmart and Carrefour, is the world’s third largest retail store with regard to the revenues that it generates. Tesco stands as the second largest retail stores of the world with regard to its profits, with Walmart being the first.Tesco has its retail stores spread across almost 14 countries of the world of Asia, North America and Europe. Tesco public limited company is the market leader in its home country United Kingdom with a market share of almost 30%. Tesco was founded by Jack Cohen in 1919 which operated as a group of stalls in the market. After its inception today Tesco plc operates across diverse areas of clothing, electronics, furniture, books, financial services and internet services. Tesco is listed at the London Stock Exchange and is a part of the FTSE 100 index having a market capital of approximately ? 24. billion and a symbol of TSCO. Tesco has been operating with seven business segments, namely, Tesco Superstores, Tesco express, Tesco metro, Tesco extra, One stop, Tesco Homeplus, and Dobbies. The market share of Tesco as recorded in 2012 was 30. 2% which was the highest as compared to its European counterparts. Tesco has developed its marketing headline to be, â€Å"Every little helps†. The tag line is represented in all the print and TV advertisements of Tesco which represents the value that Tesco offers to its customers against the price that they pay, with the value being more than the price of the products.Tesco not only works for company profits but also for the community at large in which it operates. Tesco has a value of contributing 1. 8% of its profi ts to the charitable organizations. Tesco has a culture based on its values of trust and respect. Tesco employees and management believe that the customers would come back to visit the stores for their shopping if they are satisfied with the products and the service. Tesco believes that the success of the company as a whole depends on the contribution of the employees and the customer satisfaction.Management accounting is also used in making strategic management decisions (Dixon & Smith, 1993) . Tesco has seven core strategies on which it operates in the long run. The foremost strategy of Tesco is to grow the United Kingdom core business from where it started its operations and expanded globally. The United Kingdom being the largest business operating unit of Tesco generates the largest share of revenues and profits; therefore Tesco needs to develop this major segment of the business.Tesco also has a goal of being the world’s largest retailer which it has been able to achieve since 1997 and has become the leading retail store in almost eight of its international retail stores. Tesco was originally a food retailer when it started operating and from then onwards it has aimed at becoming the strongest brand in the non-food items as well. Besides the growth in the United Kingdom segment Tesco has also a strategy of growing its retail stores in the other markets in which it has presence. Tesco believes in serving the community and working for its welfare so that the corporate responsibility of Tesco is fulfilled.Tesco also aims to make high value brands at very competitive prices. Tesco aims to build brands that are highly appealing to the customers and also in providing the customers with quality products. Tesco also builds teams that are very committed to their work and has developed leaders who are dedicated and hard working. The leaders at Tesco have a major responsibility of building teams and working for the attainment of the organizational goals (Tesc o, 2013). Tesco works closely with the customers and continuously collects their feedback by engaging focus groups in the feedback collection process.The research center facilitates the identification of the research areas and the areas of concern in the profit centers. The customer feedback collected enables Tesco to make changes to the business processes so that they better meet the customer needs. Tesco also works closely with its suppliers to develop the best brands and also bring in a variety of offers for the customers. Tesco works with a number of suppliers including the FMCG companies and the local suppliers providing goods for the regional retail stores.Management Accounting Functions at Tesco Management Accounting is distinguished from Financial Accounting as being an accounting constituent that is concerned with the measurement, analysis and the reporting of information regarding the financial and non-financial operations of the business, and taking decisions which are ne cessary for the attainment of goals of the organization (Bhimani & Langfield, 2007). Management accounting is concerned with the attainment of organizational goals and for serving the strategies of the organization (Durden, n. , p. 2). Hence, management accounting is concerned with the accounting information which is intended to be used within the organization and for the achievement of the goals of the organization. Management accounting is used in organizations to make decisions regarding the competitiveness of the business by the collection, processing, and the communication of the information which will hence help the management of the business in planning, controlling and evaluating the processes of the business and the strategies of the company.The controllers in the large organizations are basically the leaders who run the management accounting function of the company and the controller then reports the accounting information to the finance heads which helps them in taking or ganizational wide decisions. At Tesco the management accountants are known for having a number of responsibilities including the collection of information from the different cost and profit centers, evaluation of the information, and the identification of the appropriate solutions to the problems faced by the cost or profit centers.The management accountants have a responsibility of identifying the appropriate and the most cost efficient distribution systems. This role of management accounting in Tesco is related to the establishment and administration of effective control mechanisms. Another management accounting function of Tesco is the sales forecasting, which is related to the identification of the needs of the customers, sales volumes and the effects of seasonal fluctuations on the sales. The management accountants have also the responsibility of ordering the right quantity of supplies at the right time.The management accountants are also responsible for developing cost, sales and profit budgets and to make capital investment plans. The management accountants also are responsible for the comparison of the plans and budgets with the benchmarks set and the identification of the discrepancies. The management accountants work towards taking the corrective measures in case of variances between the actual and the standard budgets. The task of standard costing is assigned to them which they use to take decisions which are useful for achieving the organizational goals.The group strategy section of the financial reports shows the management roles in Tesco. The customer researches are conducted to know the extent of their satisfaction and their needs. The management accountants also plan the growth rates in the different markets across the world. The management roles are also highlighted in the capital expenditures section of the annual reports of Tesco. The capital expenditure plans are made by the management accountants. Tesco has planned for major capital expend itures which will enable it to diversify and move into expansion phases worldwide throughout all its retail chains.The management accountants are also responsible for evaluating and critically analyzing the cash position of Tesco. The management accountants are charged with the responsibility of generating cash sources and reducing the capital expenditures of the retail stores. The working capital is reduced in 2012 which has enabled Tesco to have increased cash inflows (TESCO, 2012). Functions of Modern Management Accounting at Tesco The roles of management accountants in the modern era have increased and have been very diverse in the organizations.The management accountants have many responsibilities including the formulation of accounting policies, statistical reports, administration of tax policies, coordination of the reports, preparation and the interpretation of the annual reports and the financial statements of organizations, audit of the accounting transactions and the reco rds, compilation of the business costs, costing and planning of inventories, and the interpretation of the statistical reports of the organization.At Tesco the management accountants are engaged in making budgets including annual as well as monthly budgets. The budgets prepared are used for planning the resources and the supplies required for the operations of the business. The management accountants at Tesco are responsible for looking ahead and predicting the future of the business. The management accountants prepare reports which are used within Tesco and are intended for internal use by the management rather than the outside stakeholders.The reports prepared are kept confidential because they serve as the basis of the development of the strategies of Tesco. The management accountants have a dual reporting role within Tesco in that they are responsible for developing and managing the teams within Tesco and at the same time reporting to the chief financial officers and the financi al departments. The management accountants at Tesco provide information related to the forecasts and plans, they perform variance analysis and monitor the cost centers.Therefore they serve to be the controllers as well as the financial planners for Tesco. The management accountants gather financial information from all the department of Tesco, organize the data, analyze and interpret and then report their findings to the financial departments of Tesco. Therefore, the management accounting plays a very key role in Tesco. The management accounting over the years have also developed many management systems (Anthony & Govindarajan, 2007).The management accountants are reported to by all the accounting departments and they are responsible for presenting their financial suggestions to the financial executives for the implementation of the plans. The management accountants at Tesco are therefore charged with the overall responsibility of managing and interpreting very large amounts of acco unting information, and then reporting their findings to the chief financial officers. References Tesco PLC. (2013). Our Strategy. Retrieved from: http://www. tescoplc. com/index. asp? pageid=12 Tesco PLC. (2012).Annual Report and Financial Statements. Retrieved from: http://www. tescoplc. com/files/reports/ar2012/files/pdf/tesco_annual_report_2012. pdf Durden, C. (n. d). The role of management accounting in organizational Control systems: preliminary evidence of an organic Approach. pp. 1-50. Retrieved from: http://www. afaanz. org/openconf/2008/modules/request. php? module=oc_proceedings&action=view. php&a=Accept+as+Paper&id=570 Anthony, R. N. , & Govindarajan, V. (2007). Management control systems. USA: Irwin/McGraw-Hill. Bhimani, A. , & Langfield-Smith, K. (2007). Management Accounting Running Head: MANAGEMENT ACCOUNTING The Management Accountant in Business [Name of the Writer] [Name of the Institution] The Management Accountant in Business Introduction Tesco Public Limited Company is a merchandising retailer and a grocery retailer multinational chain which has it’s headquarter in Cheshunt in the United Kingdom. Tesco as compared to its counterparts, Walmart and Carrefour, is the world’s third largest retail store with regard to the revenues that it generates. Tesco stands as the second largest retail stores of the world with regard to its profits, with Walmart being the first.Tesco has its retail stores spread across almost 14 countries of the world of Asia, North America and Europe. Tesco public limited company is the market leader in its home country United Kingdom with a market share of almost 30%. Tesco was founded by Jack Cohen in 1919 which operated as a group of stalls in the market. After its inception today Tesco plc operates across diverse areas of clothing, electronics, furniture, books, financial services and internet services. Tesco is listed at the London Stock Exchange and is a part of the FTSE 100 index having a market capital of approximately ? 24. billion and a symbol of TSCO. Tesco has been operating with seven business segments, namely, Tesco Superstores, Tesco express, Tesco metro, Tesco extra, One stop, Tesco Homeplus, and Dobbies. The market share of Tesco as recorded in 2012 was 30. 2% which was the highest as compared to its European counterparts. Tesco has developed its marketing headline to be, â€Å"Every little helps†. The tag line is represented in all the print and TV advertisements of Tesco which represents the value that Tesco offers to its customers against the price that they pay, with the value being more than the price of the products.Tesco not only works for company profits but also for the community at large in which it operates. Tesco has a value of contributing 1. 8% of its profi ts to the charitable organizations. Tesco has a culture based on its values of trust and respect. Tesco employees and management believe that the customers would come back to visit the stores for their shopping if they are satisfied with the products and the service. Tesco believes that the success of the company as a whole depends on the contribution of the employees and the customer satisfaction.Management accounting is also used in making strategic management decisions (Dixon & Smith, 1993) . Tesco has seven core strategies on which it operates in the long run. The foremost strategy of Tesco is to grow the United Kingdom core business from where it started its operations and expanded globally. The United Kingdom being the largest business operating unit of Tesco generates the largest share of revenues and profits; therefore Tesco needs to develop this major segment of the business.Tesco also has a goal of being the world’s largest retailer which it has been able to achieve since 1997 and has become the leading retail store in almost eight of its international retail stores. Tesco was originally a food retailer when it started operating and from then onwards it has aimed at becoming the strongest brand in the non-food items as well. Besides the growth in the United Kingdom segment Tesco has also a strategy of growing its retail stores in the other markets in which it has presence. Tesco believes in serving the community and working for its welfare so that the corporate responsibility of Tesco is fulfilled.Tesco also aims to make high value brands at very competitive prices. Tesco aims to build brands that are highly appealing to the customers and also in providing the customers with quality products. Tesco also builds teams that are very committed to their work and has developed leaders who are dedicated and hard working. The leaders at Tesco have a major responsibility of building teams and working for the attainment of the organizational goals (Tesc o, 2013). Tesco works closely with the customers and continuously collects their feedback by engaging focus groups in the feedback collection process.The research center facilitates the identification of the research areas and the areas of concern in the profit centers. The customer feedback collected enables Tesco to make changes to the business processes so that they better meet the customer needs. Tesco also works closely with its suppliers to develop the best brands and also bring in a variety of offers for the customers. Tesco works with a number of suppliers including the FMCG companies and the local suppliers providing goods for the regional retail stores.Management Accounting Functions at Tesco Management Accounting is distinguished from Financial Accounting as being an accounting constituent that is concerned with the measurement, analysis and the reporting of information regarding the financial and non-financial operations of the business, and taking decisions which are ne cessary for the attainment of goals of the organization (Bhimani & Langfield, 2007). Management accounting is concerned with the attainment of organizational goals and for serving the strategies of the organization (Durden, n. , p. 2). Hence, management accounting is concerned with the accounting information which is intended to be used within the organization and for the achievement of the goals of the organization. Management accounting is used in organizations to make decisions regarding the competitiveness of the business by the collection, processing, and the communication of the information which will hence help the management of the business in planning, controlling and evaluating the processes of the business and the strategies of the company.The controllers in the large organizations are basically the leaders who run the management accounting function of the company and the controller then reports the accounting information to the finance heads which helps them in taking or ganizational wide decisions. At Tesco the management accountants are known for having a number of responsibilities including the collection of information from the different cost and profit centers, evaluation of the information, and the identification of the appropriate solutions to the problems faced by the cost or profit centers.The management accountants have a responsibility of identifying the appropriate and the most cost efficient distribution systems. This role of management accounting in Tesco is related to the establishment and administration of effective control mechanisms. Another management accounting function of Tesco is the sales forecasting, which is related to the identification of the needs of the customers, sales volumes and the effects of seasonal fluctuations on the sales. The management accountants have also the responsibility of ordering the right quantity of supplies at the right time.The management accountants are also responsible for developing cost, sales and profit budgets and to make capital investment plans. The management accountants also are responsible for the comparison of the plans and budgets with the benchmarks set and the identification of the discrepancies. The management accountants work towards taking the corrective measures in case of variances between the actual and the standard budgets. The task of standard costing is assigned to them which they use to take decisions which are useful for achieving the organizational goals.The group strategy section of the financial reports shows the management roles in Tesco. The customer researches are conducted to know the extent of their satisfaction and their needs. The management accountants also plan the growth rates in the different markets across the world. The management roles are also highlighted in the capital expenditures section of the annual reports of Tesco. The capital expenditure plans are made by the management accountants. Tesco has planned for major capital expend itures which will enable it to diversify and move into expansion phases worldwide throughout all its retail chains.The management accountants are also responsible for evaluating and critically analyzing the cash position of Tesco. The management accountants are charged with the responsibility of generating cash sources and reducing the capital expenditures of the retail stores. The working capital is reduced in 2012 which has enabled Tesco to have increased cash inflows (TESCO, 2012). Functions of Modern Management Accounting at Tesco The roles of management accountants in the modern era have increased and have been very diverse in the organizations.The management accountants have many responsibilities including the formulation of accounting policies, statistical reports, administration of tax policies, coordination of the reports, preparation and the interpretation of the annual reports and the financial statements of organizations, audit of the accounting transactions and the reco rds, compilation of the business costs, costing and planning of inventories, and the interpretation of the statistical reports of the organization.At Tesco the management accountants are engaged in making budgets including annual as well as monthly budgets. The budgets prepared are used for planning the resources and the supplies required for the operations of the business. The management accountants at Tesco are responsible for looking ahead and predicting the future of the business. The management accountants prepare reports which are used within Tesco and are intended for internal use by the management rather than the outside stakeholders.The reports prepared are kept confidential because they serve as the basis of the development of the strategies of Tesco. The management accountants have a dual reporting role within Tesco in that they are responsible for developing and managing the teams within Tesco and at the same time reporting to the chief financial officers and the financi al departments. The management accountants at Tesco provide information related to the forecasts and plans, they perform variance analysis and monitor the cost centers.Therefore they serve to be the controllers as well as the financial planners for Tesco. The management accountants gather financial information from all the department of Tesco, organize the data, analyze and interpret and then report their findings to the financial departments of Tesco. Therefore, the management accounting plays a very key role in Tesco. The management accounting over the years have also developed many management systems (Anthony & Govindarajan, 2007).The management accountants are reported to by all the accounting departments and they are responsible for presenting their financial suggestions to the financial executives for the implementation of the plans. The management accountants at Tesco are therefore charged with the overall responsibility of managing and interpreting very large amounts of acco unting information, and then reporting their findings to the chief financial officers. References Tesco PLC. (2013). Our Strategy. Retrieved from: http://www. tescoplc. com/index. asp? pageid=12 Tesco PLC. (2012).Annual Report and Financial Statements. Retrieved from: http://www. tescoplc. com/files/reports/ar2012/files/pdf/tesco_annual_report_2012. pdf Durden, C. (n. d). The role of management accounting in organizational Control systems: preliminary evidence of an organic Approach. pp. 1-50. Retrieved from: http://www. afaanz. org/openconf/2008/modules/request. php? module=oc_proceedings&action=view. php&a=Accept+as+Paper&id=570 Anthony, R. N. , & Govindarajan, V. (2007). Management control systems. USA: Irwin/McGraw-Hill. Bhimani, A. , & Langfield-Smith, K. (2007). Management Accounting Running Head: MANAGEMENT ACCOUNTING The Management Accountant in Business [Name of the Writer] [Name of the Institution] The Management Accountant in Business Introduction Tesco Public Limited Company is a merchandising retailer and a grocery retailer multinational chain which has it’s headquarter in Cheshunt in the United Kingdom. Tesco as compared to its counterparts, Walmart and Carrefour, is the world’s third largest retail store with regard to the revenues that it generates. Tesco stands as the second largest retail stores of the world with regard to its profits, with Walmart being the first.Tesco has its retail stores spread across almost 14 countries of the world of Asia, North America and Europe. Tesco public limited company is the market leader in its home country United Kingdom with a market share of almost 30%. Tesco was founded by Jack Cohen in 1919 which operated as a group of stalls in the market. After its inception today Tesco plc operates across diverse areas of clothing, electronics, furniture, books, financial services and internet services. Tesco is listed at the London Stock Exchange and is a part of the FTSE 100 index having a market capital of approximately ? 24. billion and a symbol of TSCO. Tesco has been operating with seven business segments, namely, Tesco Superstores, Tesco express, Tesco metro, Tesco extra, One stop, Tesco Homeplus, and Dobbies. The market share of Tesco as recorded in 2012 was 30. 2% which was the highest as compared to its European counterparts. Tesco has developed its marketing headline to be, â€Å"Every little helps†. The tag line is represented in all the print and TV advertisements of Tesco which represents the value that Tesco offers to its customers against the price that they pay, with the value being more than the price of the products.Tesco not only works for company profits but also for the community at large in which it operates. Tesco has a value of contributing 1. 8% of its profi ts to the charitable organizations. Tesco has a culture based on its values of trust and respect. Tesco employees and management believe that the customers would come back to visit the stores for their shopping if they are satisfied with the products and the service. Tesco believes that the success of the company as a whole depends on the contribution of the employees and the customer satisfaction.Management accounting is also used in making strategic management decisions (Dixon & Smith, 1993) . Tesco has seven core strategies on which it operates in the long run. The foremost strategy of Tesco is to grow the United Kingdom core business from where it started its operations and expanded globally. The United Kingdom being the largest business operating unit of Tesco generates the largest share of revenues and profits; therefore Tesco needs to develop this major segment of the business.Tesco also has a goal of being the world’s largest retailer which it has been able to achieve since 1997 and has become the leading retail store in almost eight of its international retail stores. Tesco was originally a food retailer when it started operating and from then onwards it has aimed at becoming the strongest brand in the non-food items as well. Besides the growth in the United Kingdom segment Tesco has also a strategy of growing its retail stores in the other markets in which it has presence. Tesco believes in serving the community and working for its welfare so that the corporate responsibility of Tesco is fulfilled.Tesco also aims to make high value brands at very competitive prices. Tesco aims to build brands that are highly appealing to the customers and also in providing the customers with quality products. Tesco also builds teams that are very committed to their work and has developed leaders who are dedicated and hard working. The leaders at Tesco have a major responsibility of building teams and working for the attainment of the organizational goals (Tesc o, 2013). Tesco works closely with the customers and continuously collects their feedback by engaging focus groups in the feedback collection process.The research center facilitates the identification of the research areas and the areas of concern in the profit centers. The customer feedback collected enables Tesco to make changes to the business processes so that they better meet the customer needs. Tesco also works closely with its suppliers to develop the best brands and also bring in a variety of offers for the customers. Tesco works with a number of suppliers including the FMCG companies and the local suppliers providing goods for the regional retail stores.Management Accounting Functions at Tesco Management Accounting is distinguished from Financial Accounting as being an accounting constituent that is concerned with the measurement, analysis and the reporting of information regarding the financial and non-financial operations of the business, and taking decisions which are ne cessary for the attainment of goals of the organization (Bhimani & Langfield, 2007). Management accounting is concerned with the attainment of organizational goals and for serving the strategies of the organization (Durden, n. , p. 2). Hence, management accounting is concerned with the accounting information which is intended to be used within the organization and for the achievement of the goals of the organization. Management accounting is used in organizations to make decisions regarding the competitiveness of the business by the collection, processing, and the communication of the information which will hence help the management of the business in planning, controlling and evaluating the processes of the business and the strategies of the company.The controllers in the large organizations are basically the leaders who run the management accounting function of the company and the controller then reports the accounting information to the finance heads which helps them in taking or ganizational wide decisions. At Tesco the management accountants are known for having a number of responsibilities including the collection of information from the different cost and profit centers, evaluation of the information, and the identification of the appropriate solutions to the problems faced by the cost or profit centers.The management accountants have a responsibility of identifying the appropriate and the most cost efficient distribution systems. This role of management accounting in Tesco is related to the establishment and administration of effective control mechanisms. Another management accounting function of Tesco is the sales forecasting, which is related to the identification of the needs of the customers, sales volumes and the effects of seasonal fluctuations on the sales. The management accountants have also the responsibility of ordering the right quantity of supplies at the right time.The management accountants are also responsible for developing cost, sales and profit budgets and to make capital investment plans. The management accountants also are responsible for the comparison of the plans and budgets with the benchmarks set and the identification of the discrepancies. The management accountants work towards taking the corrective measures in case of variances between the actual and the standard budgets. The task of standard costing is assigned to them which they use to take decisions which are useful for achieving the organizational goals.The group strategy section of the financial reports shows the management roles in Tesco. The customer researches are conducted to know the extent of their satisfaction and their needs. The management accountants also plan the growth rates in the different markets across the world. The management roles are also highlighted in the capital expenditures section of the annual reports of Tesco. The capital expenditure plans are made by the management accountants. Tesco has planned for major capital expend itures which will enable it to diversify and move into expansion phases worldwide throughout all its retail chains.The management accountants are also responsible for evaluating and critically analyzing the cash position of Tesco. The management accountants are charged with the responsibility of generating cash sources and reducing the capital expenditures of the retail stores. The working capital is reduced in 2012 which has enabled Tesco to have increased cash inflows (TESCO, 2012). Functions of Modern Management Accounting at Tesco The roles of management accountants in the modern era have increased and have been very diverse in the organizations.The management accountants have many responsibilities including the formulation of accounting policies, statistical reports, administration of tax policies, coordination of the reports, preparation and the interpretation of the annual reports and the financial statements of organizations, audit of the accounting transactions and the reco rds, compilation of the business costs, costing and planning of inventories, and the interpretation of the statistical reports of the organization.At Tesco the management accountants are engaged in making budgets including annual as well as monthly budgets. The budgets prepared are used for planning the resources and the supplies required for the operations of the business. The management accountants at Tesco are responsible for looking ahead and predicting the future of the business. The management accountants prepare reports which are used within Tesco and are intended for internal use by the management rather than the outside stakeholders.The reports prepared are kept confidential because they serve as the basis of the development of the strategies of Tesco. The management accountants have a dual reporting role within Tesco in that they are responsible for developing and managing the teams within Tesco and at the same time reporting to the chief financial officers and the financi al departments. The management accountants at Tesco provide information related to the forecasts and plans, they perform variance analysis and monitor the cost centers.Therefore they serve to be the controllers as well as the financial planners for Tesco. The management accountants gather financial information from all the department of Tesco, organize the data, analyze and interpret and then report their findings to the financial departments of Tesco. Therefore, the management accounting plays a very key role in Tesco. The management accounting over the years have also developed many management systems (Anthony & Govindarajan, 2007).The management accountants are reported to by all the accounting departments and they are responsible for presenting their financial suggestions to the financial executives for the implementation of the plans. The management accountants at Tesco are therefore charged with the overall responsibility of managing and interpreting very large amounts of acco unting information, and then reporting their findings to the chief financial officers. References Tesco PLC. (2013). Our Strategy. Retrieved from: http://www. tescoplc. com/index. asp? pageid=12 Tesco PLC. (2012).Annual Report and Financial Statements. Retrieved from: http://www. tescoplc. com/files/reports/ar2012/files/pdf/tesco_annual_report_2012. pdf Durden, C. (n. d). The role of management accounting in organizational Control systems: preliminary evidence of an organic Approach. pp. 1-50. Retrieved from: http://www. afaanz. org/openconf/2008/modules/request. php? module=oc_proceedings&action=view. php&a=Accept+as+Paper&id=570 Anthony, R. N. , & Govindarajan, V. (2007). Management control systems. USA: Irwin/McGraw-Hill. Bhimani, A. , & Langfield-Smith, K. (2007).