Management Accounting (Mac)

Unit 05/ MANAGEMENT ACCOUNTING
(MAC)
BM 33
Acknowledgement
I'd want to show my gratitude to Mr. Krishen, my lecturer, for providing me with the
wonderful opportunity to write this report, which allowed me to conduct considerable
study and learn a great deal. Second, I'd want to express my gratitude to my parents
to finish my project accurately.
NILAKSHAN RAJASEKARAN / KBM322111 1|Page

(MAC)
BM 33
Table of Contents
Acknowledgement..............................................................................................................................1
TABLE OF TABLE..............................................................................................................................3
FIGURES OF TABLE.........................................................................................................................3
LO 1 and LO 2.....................................................................................................................................4
01) Introduction to management accounting..............................................................................4
Task 01.................................................................................................................................................4
01) The principles and responsibilities of the management accounting function..................4
A) Planning................................................................................................................................4
B) Decision making..................................................................................................................4
C) Budgeting.............................................................................................................................5
D) Variance analysis................................................................................................................5
E) Costing.................................................................................................................................6
Task 02.................................................................................................................................................7
1) How cost can be classified within an organization?...........................................................7
Variable costs..................................................................................................................................7
Fixed costs-:....................................................................................................................................8
Semi-variable costs-:......................................................................................................................9
2) How cost behave in the short run and long run?................................................................9
a) Cost behavior –Short Run......................................................................................................9
b) Cost behavior-Long Run...........................................................................................................9
Task 03...............................................................................................................................................11
1) Explain how management accounting adds value to other functions within the
organization...................................................................................................................................11
Conclusion.........................................................................................................................................16
LO3.....................................................................................................................................................17
Task 01...........................................................................................................................................17
1) Conflicts..................................................................................................................................17
2) Causes of conflicts................................................................................................................17
3) Conflicts faced by organization...........................................................................................18
4) Conflict management strategies to adopted by organization..........................................19
5) Managing stakeholders conflicts.........................................................................................21

(MAC)
BM 33
LO4.....................................................................................................................................................22
Task 02...........................................................................................................................................22
A) Benchmarking....................................................................................................................22
Key performance Indicator (KPI)................................................................................................24
B) The balanced scorecard...................................................................................................25
1. Financial perspectives..........................................................................................................25
2. Customer................................................................................................................................26
3. Internal business...................................................................................................................26
4. Learning and growth.............................................................................................................26
Conclusion.........................................................................................................................................28
.........................................................................................................................................................28
References........................................................................................................................................30
TABLE OF TABLE
Table 1- Budgeting.............................................................................................................................5
Table 2- Variance analysis................................................................................................................6
Table 3- Costing..................................................................................................................................6
Table 4- Operations/manufacturing................................................................................................13
FIGURES OF TABLE
Figure 1- Variable costs.....................................................................................................................7
Figure 2- Fixed costs..........................................................................................................................8
Figure 3- Cost behavior –Short Run................................................................................................9
Figure 4- Cost behavior- Long Run................................................................................................10
Figure 5 - Mendelow's Matrix..............................................................................................................21
Figure 6 - Diagram of benchmarking concept...............................................................................22
Figure 7 - The balanced scorecard.......................................................................................................25

(MAC)
BM 33
LO 1 and LO 2
01)Introduction to management accounting

The process of finding, collecting, analyzing, understanding, and communicating
financial data to managers in order to fulfill a company's goals is known as
management accounting. Management accounting differ beyond financial accounting
in that its purpose is to assist organizational users in making well-informed business
choices. (TUOVILA, 2021)
How Does It Work?
A big part of management accounting is cost accounting. It evaluates the variable

and fixed costs of each manufacturing phase in order to determine the company's
total production costs. The cost and sales profits of the company's goods and
services are used by the management accountant.
Task 01
01)The principles and responsibilities of the management

accounting function.
A) Planning - Planning include developing short- and long-term strategies and
actions to reach a specific goal. A budget is a financial plan that shows how
resources will be acquired and spent over a set period of time.
Management accounting supports managers in planning by giving data that

measure the impact of various operations on a company's capacity to achieve its
goals. For example, if a company sets a profit goal for the year, it must also figure
out how to get there.
Ex-: Daryn's Dairy is a significant producer of organic dairy products in the

Midwest, and one of its strategic goals is to increase market share. Daryn's
planning process entails the steps the company wants to follow in order to
increase market share. These plans include current-year plans, five-year plans,
and ten-year plans, among others. (Anon., n.d.)
B) Decision making -In management accounting, decision-making can be

simply defined as choosing a method of action from a collection of options. If
there are no alternative options, there is no need to make a decision.

(MAC)
BM 33
Management accounting provides information about an entity's internal flows,
resulting in a total analysis that, in addition to financial accounting, which gives
data about external flows, is a valuable tool in the decision-making process.
(Anon., n.d.)
Ex-: Choosing production facilities is one of the most common examples of

managerial decision-making. If your company grows and demand increases,
you'll need to increase productivity. The next stage would be to determine how
much power is required to appropriately meet demand.
C) Budgeting - Budgeting is used in companies for a variety of purposes, with

planning (decision making) and control being the most important. Budgets can be
used to project profitability, distribute resources, and share professional
experience about one element of an organization with other parts of the company
for planning purposes. (Butz, 2010)
Budgeting is the primary function of management accounting. Budgets serve as a

roadmap for all spending in a small business As a result, a management
accountant must evaluate previous data in order to provide an accurate forecast
of a year's spending.
Ex-: We budgeted Rs. 120 million in income and Rs. 50 million in expenses for
the month of December, resulting in a Rs. 70 million surplus. However, if our
budget is set for Rs. 120 million in income and Rs. 150 million in expenses, we
can have a Rs. 30 million deficit, indicating that budgeting can support in
determining our expected monthly surplus and deficit.
INCOME EXPENSES SURPLUS
Rs.120 million Rs.70 million Rs.50 million(+)
Rs.120 million Rs.150 million Rs.30 million (-)
D) Variance analysis -In budgeting and management accounting, variance

analysis is the study of differences between actual and projected or planned
Table 1- Budgeting behavior. This is primarily concerned with how the
differences between actual and planned behaviors reflects
how business performance is affected. (Anon., 2021)
The goal of variance analysis is to break down the difference between the two
quantities into achievable steps. Expenses and cost allowances for various levels

(MAC)
BM 33
of activity the separation of variations into meaningful areas is directly influenced
by responsibility accounting. (Butz, 2010)
Ex-: If your sales budget is $10,000 and your expense is $8,000, but your actual
sales are $8,000 (variance analysis reveals a $2,000 variance) and your expense is
$7000, you can determine that your revenue has been negative while your expense
has been positive.
BUDGET ACTUAL VARIANCE
INCOME $10,000 $8,000 $2,000(A)
EXPENSE $8,000 $7000 $1000(F)
E) Costing -Costs is the branch of accounting that deals with costing. Cost data
analysis and communication to the organization at all levels of management;
accounting for current, standard, and future expenses. It refers to the method and
procedure for calculating costs. Standard costing,
Table 2- Variance analysis budget management, inventory management, marginal
costing, and other instruments are provided by the cost accounting system to
ensure that these functions are carried out efficiently. (Anon., n.d.)
Ex-: Monthly expenses of January
Rent Rs.1500
Phone bill Rs.100
Internet bill Rs.340
Groceries Rs.1500
Total Cost Rs.3440
Table 3- Costing

(MAC)
BM 33
Task 02
1) How cost can be classified within an organization?
Costs can be categorized based on how they behave, which helps with costing
system. Classification based on availability is crucial for accurate costing of jobs and
units generated. Classification is important for decision-making because it helps
managers identify expenses that are related to a particular option. ( Obaidullah Jan,
ACA, CFA , 2019)
The main classification of costs are Fixed costs, variable costs, or mixed costs
Variable costs
A variable cost is a commercial expense that varies depending on the amount of
product or service that the company produces or sells. Variable costs grow or fall in
line with a company's production or sales volume they rise as output rises and fall as
output decreases. (KENTON, 2021)
Variable costs differ with output in the short term. Employee salary and raw material
expenses are examples of variable costs. Short-term costs rise or fall in response to
variable costs as well as production rate.
Ex-: Wages
Commissions
Packaging
Figure 1- Variable costs

(MAC)
BM 33
In graph 1 as the activity level grows, the total variable cost increases in a
continuous straight line from zero. As output levels rise, this variable continues to
raise costs and in graph 2 the variable cost of each output level is the same on a
line parallel to the horizontal axis of activity, even if the output level increases, the
variable cost per unit does not change.
Fixed costs-: A fixed cost is one that remains continuous regardless of the
quantity of products or services produced or sold.
Fixed costs, such as buildings and machinery, cannot be modified in the short term.
Fixed inputs do not move in the short term, and fixed costs are expenses that
remain constant whatever of production levels. Increasing or reducing the variable
inputs is the main way to increase or reduce output in the long term, there are no
fixed costs since the long run is long enough for all short-run fixed inputs to become
variable. (Anon., n.d.)
Ex-: Mortgage,
Salary
Insurance
Property taxes
Figure 2- Fixed costs
In graph 1, Depending on whether output changes over time, overall fixed costs stay
unchanged. Where the line is perpendicular to the axis of level of activity. The total
fixed cost does not begin at zero so if operations stops, the fixed cost will not return
to zero. Depending on whether output picks up or not, the fixed must be provided
and in graph 2 the fixed cost per unit lowers as the outflow level rises. The fixed cost

(MAC)
BM 33
is calculated by the output level to achieve the fixed cost per unit as the output level
rises. When a result, as the output volume grows, the fixed cost per unit falls.
Semi-variable costs-: The term “Semi-variable costs " refers to a cost that
includes both fixed and variable elements. Costs remain constant until a specific
amount of output or consumption is reached, at which point they become variable.
Semi cost remain constant over short periods of time but change over time in long
term.
Ex-: Repairs, Charges for telephone service on a monthly, Fuel, indirect labor
2) How cost behave in the short run and long run?

a) Cost behavior –Short Run
The Short-run Cost is a cost in the manufacturing process that has a short-term impact, it is
used over a limited speed variety. These are costs that are incurred only once and cannot be
reused, such as wages, raw material costs. The fixed cost (which does not fluctuate with
the level of output) and variable cost (which does change with the level of output) are
both included in the short-run cost (that varies with the variations in the level of output).
(Anon., n.d.), (businessjargons, 2019)
Figure 3- Cost behavior –Short Run
As can be seen from the U-shaped curve, the main regions are growing returns to
scale, in which costs reduce as output increases and fixed costs are dispersed over
a larger quantity of output. As a result, the Maximum efficiency point has been
reached, and the returns to scale are decreasing. The cost rises as the output rises.
b) Cost behavior-Long Run

The long run is a period of time during which all production processes and costs are subject
to change. Companies could vary all costs over time, but they can only affect pricing inside

(MAC)
BM 33
the short term by modifying output levels. Furthermore, while a company may be a monopoly
in the short run, it may face competition in the long run. (GRANT, 2021)
Figure 4- Cost behavior- Long Run
Economic of sales -: The percentage change in cost is divided by the

percentage change in output to get at this figure. A cost elasticity value of the less
than one suggests the presence of economies of scale. When an increase in output
is projected to result in a drop in unit cost while keeping input costs constant,
economies of scale exist.
Constant Returns to scale-: When an increase in input produces a

corresponding increase in output, this is called a constant returns to scale. When the
output grows at a faster rate than the input, this is called increasing returns to scale.
Diseconomic of sales -: When a corporation or business expands to the point

where its costs per unit rise. Using this theory, instead of continuing to reduce
expenses while increasing output, a company will observe an increase in costs as
output rises.
NILAKSHAN RAJASEKARAN / KBM322111 10 | P a g e

(MAC)
BM 33
Task 03
1) Explain how management accounting adds value to other
functions within the organization
a) Human resource management
 HR managers are in charge of developing and monitoring departmental budgets.
They are better prepared to think about budget issues like training, recruitment,
personnel, incentives, and performance appraisal in regards of the cost and
economic benefit to the organization because they have an accounting
background. (Anon., n.d.)
They'll help the guys in deciding on or developing a financial plan or budget for
their monthly income and expenses... As a result, when you look at the income in
the Hr. department, you'll notice that they don't make much money because they
don't sell anything and their expenses are very expensive. The department is in
charge of salary, bonus, and overtime payments, among other things. As a result,
when you look at the income in the hr. department, you'll notice that they don't
make much money because they don't sell anything and their expenses are very
expensive. The department is in charge of salary, bonus, and overtime payments,
among other things.
 They're also concerned in headcount planning, and management accounting
improves human resources professionals in forecasting what types of employers
and how many employees will be needed in the future. Headcount planning is a
systematic process that ensures that an organization's partners and
organizational structure can satisfy short- and long-term objectives while staying
within a certain budget. Headcount planning helps CEOs manage succession
plans, and it incorporates a business's awareness of its present organization
development, labor expenses, performance, and human resource management.
 "Cost benefit analysis" is one of the most necessary elements of management

accounting. This method was used to calculate the advantages of making a
choice or taking action with the expenses of doing so. If the company decides to
pay a bonus at the end of the year, the HR department will say sure, let us pay
the bonus, since every time you offer a cash reward, the employees' excitement
will improve. Although, in their thoughts, HR guys will talk about bonuses, and
they want to accurately determine how paying bonuses will affect our bank's profit
and loss and cash flow balance. Companies can calculate the benefits of a
decision using cost benefit analysis. It includes actual financial data such as
money generated and costs avoided as an outcome of pursuing a plan.

(MAC)
BM 33
b) Marketing
In company as an accountant, pricing is the element of the marketing mix you will
most frequently come into contact with. Rather than keeping your relationship with
price at a purely practical level, though, it can be beneficial to grasp the thinking
behind it. The considered worth of a product is determined by its price. Some
companies believe that the price of their product is the most important factor, and
they are willing to lower it to compete with competitors and win market share. Part of
your job as an accountant may be to search for methods to minimize costs by
improving processes, allowing for competitive pricing drops. (Barlow, 2015)
Marketing budgeting -: A small business's marketing department is in charge of

developing the company's advertising and promotion tactics. The marketing
department's budget is generally monitored by accounting, which issues regular
financial reports that show whether budgeting plans are on track or even have
incurred huge costs. These actions support the marketing department in staying
within budget. Marketing and accounting work to identify an acceptable budget for
promotional measures and to calculate the expected return on investment.
(McQuerrey, n.d.)
ROMI (Return on Marketing Investment)
Return on Marketing Investment (ROMI) is a method to calculate the financial value

associated to a certain set of marketing activities (net of marketing spending),
divided by the marketing ‘invested' or risked for those actions. It is usually applied in
many companies because it: adds a level of management to future cash flows;
improves marketing performance; and gives a specific method to marketing
management that helps finance departments gain confidence and understanding.
(Alan S Dunk, 2003)
ROMI = ((marketing income – cost of goods – marketing expenses) / marketing

expenses) * 100. If the ROMI is less than 100%, marketing investments were
wasteful; if it is greater than 100%, marketing investments were profitable. (Velikiy,
2018)
c) Operations/manufacturing
Manufacturing cost accounting includes everything that has to do with production

and inventory valuation. These operations can greatly increase a company's
earnings while also bringing it into line with accounting requirements. Manufacturing
accounting is the primary responsibility of the cost accountant. All parts of
manufacturing cost accounting are listed here. Requirement analysis is the most
significant because proper management of a company's limit is the most crucial
source of profit. Inventory valuation and cost of goods sold are two of the most
important aspects of manufacturing accounting. (Anon., 2021)

(MAC)
BM 33
Ex-: Product-: Cup of coffee
Manufacturing Cost Standard quantity * Standard costing = Cost

information summary
Per unit
Direct material
Material(Coffee ground) 0.5 ounces $.50 per ounce $.0.25
Direct labor
Barista 1 minute $.0.20 per unit $.0.20
Manufacturing
overhead
(Variable overhead) 1 minute $.0.05 per direct labor minute $. 0.05
(Fixed overhead) 1 minute $.0.10 per direct labor minute $.0.10

Standard cost per cup of coffee
$ .0 .60/¿
Table 4- Operations/manufacturing
 Management accountants are huge amount of people of a company's financial

team. TQM is responsible for controlling the company's past, present, and future
costs using structured accounting system, standard costing, and general
accounting.Kaizen is a method of continuous improvement that focuses on tiny,
systematic changes to the system. It generally involves a significant section of an
organization's workforce. Kaizen is most typically used in manufacturing
processes, however it may be used elsewhere in a company. The goal of these
improvements is to increase the quality and efficiency of a company by focusing
on principles like job standardization, waste elimination, and just-in-time activities.
(Anon., 2021)
Because management accountants are involved in decision-making, they

understand how to put plans in place. Implementing kaizen and TQM, for
example, is a long-term plan, and management accountants would understand
how to put long-term plans in place within the business.
Negotiating with suppliers
 When management accountants engaged negotiating with suppliers, they had to

be concerned about the quality of the goods they were receiving as well as the
price they were receiving from their suppliers. They would know what kind of
quality raw material they require, such as A, B, or C grade raw material, for

(MAC)
BM 33
example. They do not, however, have a clear understanding of how to conduct
raw material pricing negotiations. If the raw material is of high quality, the price
will be high, and we can't afford to pay too much even if the raw material is of
high quality, so we must figure out how much we should pay, and then negotiate
with the supplier. Since managing accountants are familiar with finance, they will
take the initiative on pricing. Because management accountants understand the
quality of a raw material and the importance of cost, they will carry out their duties
for suppliers.
d) IT
 When it comes to financial transactions that include the sharing of information,
information technology plays an essential role in business and in all operations.
Information technology has transformed the way we behave in the world in
unanticipated ways, such as allowing us to deliver products to our front door
while we are at home. Accounting management has a beneficial and simple
impact on technology since it allows for the payment of shares to be done at the
consumer's fingertips and is digitized, which improves accounting.
 The IT budget can and will be used as a budgeting tool to help the entire
business prepare for future technology demands and convey the priorities that
those needs will support to internal and external stakeholders. Management
accounting provides good IT budget process which sets budget guidelines for IT
investments. A bad IT budgeting process, on the other hand, can lead to
governments investing in technology that add layers of complexity or a poor
infrastructure in technology that is crucial to operations. (Anon., 2013)
 Negotiation with suppliers - When you buy a system, you must perform
maintenance on it on a monthly basis. When trying to fix a bug, you must also
maintain IT service providers, so when choosing an IT maintenance service
provider, we must first determine how much we will spend on a monthly basis,
and as such all of these calculations with respect to monthly IT spend and
ensuring that we purchase systems that introduce value to organizations is the
primary responsibility of accounting.
e) R&D
 Setting R&D Budgets - Management accountant’s looks at how much such
engagement is linked to two things: first, a focus on financial concerns when
setting R&D budgets, and second, the importance of budget targets for R&D
managers. However, research has been done on the influence of management
involvement on R&D budgeting. Third, the research looks at how that
involvement affects R&D performance evaluation. The study's findings show that
these three criteria have an impact on R&D budgeting. (Alan S Dunk, 2003)
 So, while calculating research costs and capitalizing development expenses,
you're spending money without knowing the outcome, which means that if you

(MAC)
BM 33
want to launch a new product, you'll need to first create a prototype, which will
then need to be tested to determine if it works.
Consider the following scenario: we have spent 5 cores on the prototype to

create this product, but if we test the prototype and it does not work, we will pay
research and development costs on the P/L statement as an expense. However, if
we spend 5 cores on the prototype and it works perfectly, the money we spent will
be recorded as an asset on the balance sheet. Management accountants will be
on hand to decide if the expense is an asset or an expense.

(MAC)
BM 33
Conclusion
In the above mentioned report, I have the management accounting function's
principles and responsibilities as the first task.
The second task clearly shows how costs can be categorized and represented in a
graph, as well as cost behavior in the short and long term.
Explain how management accounting helps other functions inside the organization in
the third task.

(MAC)
BM 33
LO3
Task 01
To - Chief Executive Officer
From - Assistant Accountant
Subject- Conflict Resolution and management Tools
1) Conflicts
A conflict of interest arises when private or self-serving interests meet with
business responsibilities and duties, making a business or individual untrustworthy.
In business, a clash of interest occurs when a person favors personal benefit over
responsibilities to the company or a stakeholder group, or if they use their status for
personal benefit in certain manner. (SEGAL, 2020)
Disagreement among two or more parties, including such individuals, groups,

organizations, countries, or department, is referred to as a conflict. People may have
conflict within themselves. In politics, conflict may relate to uprisings or other
conflicts, as well as wars involving the use of military force. Conflicts in various
situations that are not properly resolved can cause stress and tension among various
stakeholders. When two people are engaged in an emotional disagreement, the
impact is significantly greater. (Anon., 2015)
Personal, race, social, caste, political, and international factors can all contribute
to conflict. Conflict in groups keeps taking a set pattern. An early conflict, usually
generated by differing views, disagreements among members, or a shortage of
resources, affects routine group engagement.
2) Causes of conflicts
Conflicts can arise due to a variety of factors, including disagreement, missing
information, history, differing abilities, and discussion. Several works are performed
inside an organization for clear motives of differing ideas, resulting in confrontations.
Misunderstanding -: Misunderstandings are the biggest common cause of conflict.

Misunderstanding may happen whenever particular news is presented, yet lack for
ability to understand and act on as directed is a source of disagreement. This can
happen among individuals, including across an organization department, either
among any two parties. As a result, each of them charges the other of being
misinformed.
Miscommunication - When anything bad happens at work, it's all too simple for
people to blame each other. People are sometimes ignorant of their responsibilities

(MAC)
BM 33
on a task. Maybe there is a lack of trust in place related to bad management. In any
case, a lack of responsibility might lead to miscommunications.
Ex -: He may believe he is charming a female employee by telling her how lovely

she dresses, but she may misunderstand his statements as sexual misconduct.
When employees make jokes about a coworker's ethnicity, these may occur.
(Munroe, 2018)
Different power levels -: Individuals had various views of the authority, and they
think others should respect and know whatever they think is correct and what they
really want to achieve. When managers would conduct anything stupid, and
individuals under their level of management or supervision will doing the similar, they
are more likely to set rules and use authority, resulting in disagreements between
two levels of discussion on what they think is correct.
Personality clashes -: A personality clash in the organization occurs when

employees are at conflict with just one another because of mismatched personalities,
perspective in life, conflicting professional methods, or simply a different perspective
on life. A personality clash happens when 2 or more people come into conflict
beyond a basic disagreement in their personalities, ways to issues, or way of life,
rather than on a specific problem or event. Because personality clashes are
generally difficult for organizations to deal with, there isn't always a clear problem
that creates the disagreement. (Briggs, 2021)
As a result, the clashing characteristics of an introvert and an extroverted person

may contribute to frustration or harassment, with most being ignored and separated.
Extrovert is defined as a personality feature in which one seeks fulfillment largely

from sources other than oneself. Extraverts are passionate, energetic, aggressive,
and social people who like human contact.
An introvert is a person who displays features of the introverted personality type,

which indicates they concentrate on their inner emotions and views or what is going
on around them.
3) Conflicts faced by organization

Interdepartmental -: When departmental managers participate in empire
building, there is an interdepartmental conflict. When supervisors attempt to
constantly motivate their staff by informing team members or the organization's
owners that their department is much more essential than many others, it can occur.
(White, n.d.)
As a result, they establish an environment where employees accept and dismiss the
work of teammates in other departments. This causes disagreement as a result of a
lack of regard for other people's work. Managers must prevent bringing other

(MAC)
BM 33
departments behind and educate staff about their value in the larger business to
minimize this sort of conflicts.
Ex-: When the marketing department is usually concerned in advertising and

investing a big sum of cash, and finance is tasked with recognizing the company's
budgets and costs, a conflict might arise.
Intradepartmental -: When conflict occurs in the organization, it might be intra-

group conflict, which occurs among individuals of the same department or team, or
inter-group conflict, which occurs among members of two separate departments and
units. These disagreements can emerge as a result of a lack of teamwork, and then
they go unseen because they are hidden behind personal issues, reducing
performance because a team worker is at the basis of company. (Anon., n.d.)
Ex-: A personal matter involving how talented or educated every person are, what
people feel, and also what people feel they must be rewarded for performing a good
performance.
Stakeholders -: Stakeholder conflict occurs when the goals of multiple

stakeholders are conflicting. It is an "issue" for the company since it may have an
impact on its productivity and profitability. Companies must properly handle
stakeholders’ concerns in order to avoid conflict. Not because all stakeholders are
important to the company's success.
Ex-: Owners, in general, want to make a lot of money, therefore they may be afraid
to pay their employees a lot of money. A company decision to transfer production to
another country may result in lower labor expenses.
4) Conflict management strategies to adopted by organization

Interdepartmental conflicts management
a. Interdepartmental training
Conflict resolution focuses greatly on training. Training improves productivity and
success by raising understanding, developing knowledge of departmental tasks and
duties, and promoting the importance of each department to the organization. These
must been no conflict as a result of the training. Training improves morale, improves
departmental involvement, and helps organizations fulfill a main task.
b. Setting super ordinate goals
Superordinate goals are a technique of gathering together different groups of people

and setting a collective aim that moves everyone to set their differences elsewhere
and work against a common purpose that helps everybody. They're goals which
could really be reached if the various parties work together to attain a common goal

(MAC)
BM 33
while remaining open to each other's views. This encourages people to put behind
their differences and work together to achieve a common objective.
c. Having office parties and trips
In a reason, parties and travels enable people to meet and engage in a variety of
surroundings, as well as make their own minds up to discuss about and appreciate
their characteristics. These support workers from various departments in achieving
how many are just like them, and in developing new relationships between
departments when people come together, resulted in less disagreements.
d. Member rotation
Employees should been provided a duration of rotations and execute that work in
several of situations, that would help them to build special abilities and meet people.
It could even form strong bonds among those that seem to just be hard to manage
with, which workplace skills gain a new viewpoint, plan for changing, communicate
with various people, plus handle problems more quickly.
Intradepartmental conflicts management
a. Negotiation and agreement

Negotiation supports in the development of greater thinking and relationships, the
development of short solutions instead of temporary ones, and the reduction of
future conflicts and difficulties. (Queensland Government, 2020)
The agreement confirms the fact that such members had decided to avoid more
misunderstandings, allowing them to operate in a good and relaxing manner
because they realize it's all safe and within management.
b. office trips and parties

Getting apart from workplace allows teammates learning more one someone else’s
characteristics as well as explain any mistakes, and their common experience of
satisfaction could let them engage in innovative ways. Employee interaction can help
to resolve intra departmental conflicts.
c. Third party consultation

Third-party discussion is a way for studying and resolving social conflict in organized
teams. A summary of studies concerning social identity conflict resolution in
organization, community, and international situations is preceded by a summary of
the method's main components.

(MAC)
BM 33
5) Managing stakeholders conflicts

Mendelow's Matrix
Mendelow's Matrix is a method for analyzing stakeholders and their perspectives. It

would come into play aspects such as a stakeholder's level of engagement in a
project's or organization's chosen strategy, as well as when they are going to use
these their authority to affect this.
Figure 5 - Mendelow's Matrix

– Strategies
■ Key player - These stakeholders get a great deal of strength and a lot of special
interests. Top leadership, directors, key investors, or partnerships may fall into
this category. They will want that communication and participation in decision-
making be given top importance.
■ Keep Satisfied - People with a lot of authority, yet who aren't particularly
interested (Keep Satisfied): Do enough effort with all such people to maintain
them happy, but not so many that the idea becomes boring to them.
■ Keep informed - Low-power, high-interest individuals (Keep Informed):

sufficiently educate and converse with these individuals to ensure that no serious
concerns arise.
■ Minimal effort - Stakeholders in this group are uninterested in the organization

and lack power. Suppliers through which the organization is doing a limited
amount of business are an instance of this. These stakeholders' choices get a
minimal effect. (Manuel, 2019)

(MAC)
BM 33
LO4
Task 02
A) Benchmarking
Benchmarking is a procedure of considering an organization 's existing operations
before locating, appreciating, and applying best business techniques with others
organizations.
Benchmarking is a systematic method for comparing an organization’s achievement

with its greatest within its business. So prevent "reinventing the wheel," study that
other perform well and then follow it.
Diagram of benchmarking concept
Figure 6 - Diagram of benchmarking concept
Reasons to benchmarking
Set clear business objectives - Benchmarking on some kind of basis will help you
define better business objectives for your company. Knowing why the business is
performing will provide you with key information that will help you to set focuses on
the tasks by performing better, plan new ways to make an impact, and improve your
life against each target over time.
Create new opportunities for learning - Benchmarking is also significant in

business because it allows you to find new chances for higher continued success.
This is also key if your company is stopped or not growing as you would like.
Benchmarking helps you to find areas where your business may grow in order to
(MAC)
BM 33
keep up with the development and achievement of other similar businesses. You
should create a plan to improve productivity and taking use of new chances by
understanding how other businesses will do to become profitable. (Indeed Editorial
Team, 2021)
Boost your company's sales performance - Good sales boost a company's

successfulness, but just not knowing the correct information to understanding your
sales growth might be an obstacle for your company. Benchmarking allows you to
check your sales data and match them to those of the top profitable companies in
your area of business.
Improve your understanding of the competition - Benchmarking is useful in

business because it helps you to gain a greater understanding of your competitors
overall. Knowing how your competitors operate and what factors contribute to their
general performance helps in growing your ongoing operations while also improving
overall power and quality.
Steps of the benchmarking process

 Decide what to benchmark - Decide if you'll benchmark procedures inside your
own company, against a competitor, or against a company from a different
industry.
When benchmarking a direct competitor, it may be difficult to collect all of the
information you need. As a result, you must choose lots of individual
organizations to research in order to obtain the information you require.
 Understand current performance - We must know our current procedures in
order to identify opportunities for improvement and compare them to the chosen
organization or competition.
 Plan - Make a plan to make the improvements you've determined are the most
effective in closing achievement gaps. Overall view from the top down is required
for success.
 Study others - To gather the knowledge we require, we must engage in a variety
of organizations. We must collect data from a number of areas to provide the
most complete picture of the organization we've decided to investigate.
 Learn from the data - We learned about business processes through our study.
We can put our records on top of our such or track out our competitors'
procedures seeing where we've fallen back. As we examine the similarities, we
must also help to identify what causes the difference in our operations.
 Use the finding - Improvements and personnel behavior should be closely
monitored. Identify areas that need to be modified if new procedures are not
working smoothly as planned. We must guarantee that all personnel are aware of
their responsibilities, are well-trained, and possess the necessary experience to
execute their given tasks. (Lucid Content Team, n.d.)

(MAC)
BM 33
Types of benchmarking
Internal benchmarking discusses a company's performance, methods, and
practices against those of other departments (e.g. different teams, business units,
groups or even individuals).
Ex-: Benchmarks can been applied to comparing procedures in one retail store to
being in the other in the same chain.
Competitive benchmarking is a strategy for individuals who wish to stay ahead of

the competition by knowing what they are. It's a method of using a collection of
measurements to determine the optimal methods, strategies, and tactics for reaching
your business goals. (SHANG, 2021)
Ex-: If you wish to check your pricing approach, look at goal-specific data like
average price increase. In our essay on competitive benchmarking, you'll find
practical advice and examples. (Winik, 2021)
The practice of measuring a company's business performance or practices to those

of other companies who is generally in the similar market is known as generic
benchmarking.
Ex-: Every company wants to be a successful learner, because such a company is

better able to handle obstacles and react to changing market conditions.
Key performance Indicator (KPI)

A set of measurable data used to judge a company's current long-term success is
referred to as key performance indicators (KPIs). KPIs are used to decide a
company’s managerial, financial, and operational successes, especially when
matched to other companies in the same industry. (TWIN, 2021)
Ex-: Cost of gaining a customer. Customer Lifetime Value is the amount of money a
customer spends over the course Customer satisfaction level is a tool that measures
how satisfied customers are with a product or service. (Actual/Proposed) Sales
Target Percentage. (Anon., n.d.)
Critical Success factors - CSFs are major parts that a company, team, or
department need focused on and correctly perform in order to achieve its business
goals. The successful implementation of these performance elements must result in
a favorable outcome and add significant value to the company. (Anon., n.d.)

(MAC)
BM 33
Ex-: An organization can decide that a suggested effort will not help affect a certain
success element and, as a result, will take attention away from their main
performance planning, waste time, and waste resources.
Strategic aims - We use these tools to plan and concentrate our various tasks. We
must include detailed objectives and goals for each Strategic Aim in the Corporate
Plan.
B) The balanced scorecard
Figure 7 - The balanced scorecard
A balanced
scorecard (BSC) is a success tool for identifying, improving, and controlling the
various operations and results of an organization. BSCs are first created for for-profit
businesses, but they have since been transformed used by nonprofits and
government entities. To produce provable results, managers and executives should
gather and accept data. Company staff could be able to use that details to create
Under the heading of balanced scorecard, there are four sections. The following are
the details:
1. Financial perspectives
According to (Dahiru, 2014)The financial perspective of a company is to verify that
this really produces a return on its investments but maintaining controlling significant
risks connected with operating the business. Return on Investment (ROI), Cash
Flow, Net Operating Income, and Increased Revenues are the most common
success statistics featured in this approach. The financial perspective looks at

(MAC)
BM 33
whether stockholders see the reward payout ratio, operational cost reductions, profit
after tax, return on capital employed (ROCE), and overall sales development.
Operating profit margins suggest how successful a company's management has

been in making money from its operations. Considering the needs of all stakeholders
in the company, namely shareholders, consumers, and suppliers, is one way to
achieve the goals. Financial data like as sales, expenses, and income are used to
measure financial results (OP margin). Financial measurements include dollar
amounts, profitability statements, budget changes, and profit targets.
2. Customer
One of the viewpoints of the balanced scorecard is the customer, who is among the
most significant groups of stakeholders and has always been at the center of the
organization's attention. So, in order to attain long performance, the business
determines its client groups and interacts with them in order to identify the needs and
transform them into strategic goals and activities. Customers, also known as clients,
are absolutely necessary to any organization; lacking them, this would stop existing.
Customer opinion is obtained to identify consumer experience with the performance,
cost, and purchase of the product or service. Customers provide opinions on how
satisfied they are with their present product.
3. Internal business
According to (Pari, 2021) The procedures that develop and distribute the service
offering are the focus of the internal process perspective. It concentrates on all of the
operations and essential procedures that are needed for the organization to thrive at
delivering the value that customers demand in a successful and motivated manner.
Answering the question, "What do us well at?" is a crucial part of this strategy. The
response can support the business in building business strategies and promoting
developments that promote the growth of finding better ways to meet customer
needs. These are done to analyses the quality of the products. Operational
management keeps control of gaps, delays, bottlenecks, shortages, and waste.
4. Learning and growth

The learning and growth viewpoint is the foundation of any plan, focusing on an
organization's marketable securities, particularly the internal skills and talents
needed to maintain importance internal processes. The business world is very
changing, and in order to survive, much alone grow, a company must react
constantly. In order to realize goals such as expanding market share, leadership
must focus on developing the company's plans. Before taking action, R&D usually
applies a balanced scorecard to evaluate innovative initiatives and prospects.
Balanced scorecards generally analyses prospects in context, failing to account for
the various scenarios, uncertainty, and risk that innovation projects involve.

(MAC)
BM 33
The company's goals in terms of learning and growth, as well as internal procedures
that are critical in R&D activities, will be those that, very short, support it in meeting
its strategic goals relating to customer and shareholder fulfillment. In the Balanced
Scorecard, return on investment is a high quality financial measurement. The
percentage of repeat customers and sales volume to current customers are typically
important statistics from a customer perspective. Balanced Scorecard is planned to
provide with the knowledge and techniques necessary to assist your organization in
increasing focus on strategic plan and results, improving organizational
achievement, linking work with strategic plan, focusing on developing performance
drivers, and improving connectivity of the organization's vision.

(MAC)
BM 33
Conclusion
The report of Lo 01 and Lo 2 (task 01 and task 02) concludes that the Introduction
of management accounting with the principles and responsibilities of the
management accounting function. Management accounting provides choice with
timely availability to important data. The Principles provide guidelines on recognizing
past, present, and future information from various sources, including financial and
non-financial data. This covers information on social, environmental, and economic
issues.
Planning - Management accounting is closely interwoven in planning both

because it provides information for decision-making and because the entire
budgeting process is developed around accounting-related reports.
.
Design making - The goal of decision-making is to earn profits by employing the
best option approach available. Management accounting improves decision in
financial matters. Accounting data is used to solve a variety of management issues.
Every company must make the correct decision at the appropriate moment
Variance analysis - By comparing planned and actual costs, variance analysis
helps keep a project's costs under control. Variance analysis may help a business in
identifying patterns, difficulties, opportunities, and risks to its short & long growth.
Costing - Cost accounting is concerned with the calculation and measurement of
costs and expenses incurred in the purchase or production of a product.
In the task 02, I have included how cost (Variable costs, fixed costs, Semi-variable
costs) can be classified within an organization. In addition, I used a relevant diagram
to show how costs act in the short and long run. In accounting, understanding
between the short and long run is significant since it teaches businesses what to do
at various times. With the net loss, if the company's marginal sales exceed its
marginal cost in the short run, it can keep producing.
In the task 03, I have included how management accounting adds value to other
functions within the organization (Human resource management, Marketing,
Operations/manufacturing, IT, R&D)
In the lo 3, Conflicts, Causes of conflicts, Conflicts faced by organization, Conflict

management strategies to adopted by organization Managing stakeholders conflicts
and Managing stakeholders conflicts are well explained and clearly mentioned
In the lo 4, I have included and clearly mention below facts;

(MAC)
BM 33
Benchmarking - is been explained. Benchmarking is a method for identifying
shortcomings and increasing market share in business by matching best practice to
the organization's procedures. Benchmarking can be used to measure any company
process, approach, function, or product.
Key performance Indicator (KPI) - which is important in providing teams with goals
to strive for, checkpoints to track progress, and data to help everyone in the
company plan for the future
The balanced scorecard - provides an effective process for defining and gives a
general. It means that important advisers or promoters of future results, as well as
business results, are recognized to produce an overall picture of the strategies.
Four sections of financial perspectives, customer, internal business and

learning and growth also included in balanced scoreboard with a good note.

(MAC)
BM 33
References
Obaidullah Jan, ACA, CFA , 2019. Cost Classifications. [Online]
Available at: https://xplaind.com/209931/cost-classifications
[Accessed 1 September 2021].
Alan S Dunk, A. K., 2003. TOP MANAGEMENT INVOLVEMENT IN R&D BUDGET SETTING: THE
IMPORTANCE OF FINANCIAL FACTORS, BUDGET TARGETS, AND R&D PERFORMANCE EVALUATION.
[Online]
Available at: https://www.emerald.com/insight/content/doi/10.1016/S1474-7871(02)11008-2/full/
html?skipTracking=true
Anon., 2013. Budgeting for information technology. [Online]

Available at: https://www.bakertilly.com/insights/budgeting-for-information-technology
Anon., 2015. Conflict Is The Disagreement Between Two Parties Religion Essay. [Online]
Available at: https://www.ukessays.com/essays/religion/conflict-is-the-disagreement-between-two-
parties-religion-essay.php
[Accessed 11 October 2021].
Anon., 2021. Definition of 'Variance Analysis'. [Online]

Available at: https://economictimes.indiatimes.com/definition/variance-analysis
Anon., 2021. Kaizen definition. [Online]

Available at: https://www.accountingtools.com/articles/what-is-kaizen.html
Anon., 2021. Manufacturing cost accounting definition. [Online]

Available at: https://www.accountingtools.com/articles/what-is-manufacturing-cost-
accounting.html
Anon., n.d. 170 KPI Examples And Templates. [Online]

Available at: https://www.qlik.com/us/kpi/kpi-examples
Anon., n.d. Costs in the Short Run. [Online]

Available at: https://opentextbc.ca/principlesofeconomics2eopenstax/chapter/costs-in-the-short-
run/
Anon., n.d. Define Managerial Accounting and Identify the Three Primary Responsibilities of
Management. [Online]

(MAC)
BM 33
Available at: https://opentextbc.ca/principlesofaccountingv2openstax/chapter/define-managerial-
accounting-and-identify-the-three-primary-responsibilities-of-management/
[Accessed 1 september 2021].
Anon., n.d. Fixed cost. [Online]

Available at: https://en.wikipedia.org/wiki/Fixed_cost
Anon., n.d. How Will Accounting Make You Be a Better Human Resource Manager?. [Online]
Available at: https://work.chron.com/accounting-make-better-human-resource-manager-2836.html
Anon., n.d. Management Accounting and Decision-Making. [Online]

Available at: http://www.microbuspub.com/pdfs/chapter2.pdf
Anon., n.d. Management Accounting: Definition, Functions, Objectives, Roles. [Online]

Available at: https://www.iedunote.com/management-accounting#:~:text=Costing%20is%20a
%20branch%20of,are%20the%20basic%20managerial%20functions.
Anon., n.d. What Are Critical Success Factors for a Project?. [Online]
Available at: https://cmoe.com/glossary/critical-success-factors/
Anon., n.d. What Inter and Intra Mean in the Workplace. [Online]
Available at: https://www.indeed.com/hire/c/info/inter-vs-intra
Barlow, P., 2015. THE RELATIONSHIP BETWEEN MARKETING AND ACCOUNTING: KOTLER’S
MARKETING MIX. [Online]
Available at: https://babington.co.uk/blog/accounting/accounting-kotlers-marketing-mix/
Briggs, M., 2021. Tricky issues: How to deal with personality clashes in the workplace. [Online]
Available at: https://www.shoosmiths.co.uk/insights/articles/tricky-issues-how-to-deal-with-
personality-clashes-in-the-workplace
businessjargons, 2019. Short-run Cost. [Online]

Available at: https://businessjargons.com/short-run-cost.html
Butz, C., 2010. Role and Effects of Budgeting in Managerial Practice. [Online]
Available at: https://www.grin.com/document/176624

(MAC)
BM 33
Dahiru, 2014. Balanced Scorecard financial measurement of organizational. [Online]
Available at: https://iosrjournals.org/iosr-jef/papers/vol4-issue6/A0460110.pdf
[Accessed 12 November 2021].
GRANT, M., 2021. Long Run. [Online]

Available at: https://www.investopedia.com/terms/l/longrun.asp
Indeed Editorial Team, 2021. 7 Reasons Why Benchmarking in Business Is Important. [Online]
Available at: https://www.indeed.com/career-advice/career-development/benchmarking-in-
business
KENTON, W., 2021. Variable Cost. [Online]

Available at: https://www.investopedia.com/terms/v/variablecost.asp
Lucid Content Team, n.d. 8 Steps of the Benchmarking Process. [Online]

Available at: https://www.lucidchart.com/blog/8-steps-of-the-benchmarking-process
Manuel, M., 2019. MENDELOW’S MATRIX. [Online]

Available at: http://zeritenetwork.com/mendelows-matrix/#:~:text=Minimal%20effort
%20(A),stakeholders%20have%20a%20low%20impact.
McQuerrey, L., n.d. Relationship Between Accounting & Marketing. [Online]

Available at: https://yourbusiness.azcentral.com/relationship-between-accounting-marketing-
25785.html
Munroe, S., 2018. Examples of Miscommunication at the Workplace. [Online]

Available at: https://careertrend.com/examples-miscommunication-workplace-2667.html
Pari, 2021. SM Asy 14.08 | PDF | Strategic Management | Business - Scribd. [Online]
Available at: https://www.scribd.com/document/520500055/SM-ASY-14-08
[Accessed 12 Novemeber 2021].
Queensland Government, 2020. Negotiating successfully. [Online]

Available at: https://www.business.qld.gov.au/running-business/marketing-sales/managing-
relationships/negotiating
SEGAL, T., 2020. Conflict of Interest. [Online]

Available at: https://www.investopedia.com/terms/c/conflict-of-interest.asp

(MAC)
BM 33
SHANG, J., 2021. What is Competitive Benchmarking?. [Online]
Available at: https://www.adroll.com/blog/growth-marketing/what-is-competitive-benchmarking.
TARVER, E., 2021. Balanced Scorecard (BSC). [Online]

Available at: https://www.investopedia.com/terms/b/balancedscorecard.asp
TUOVILA, A., 2021. Managerial Accounting. [Online]

Available at: https://www.investopedia.com/terms/m/managerialaccounting.asp
TWIN, A., 2021. Key Performance Indicators (KPIs). [Online]

Available at: https://www.investopedia.com/terms/k/kpi.asp
Velikiy, A., 2018. Evaluating the effectiveness of advertising campaigns: ROMI, ROI and ROAS.
[Online]
Available at: https://blog.rontar.com/evaluating-the-effectiveness-of-ad-campaigns-romi-roi-roas
White, M., n.d. Interdepartmental Conflict. [Online]

Available at: https://yourbusiness.azcentral.com/interdepartmental-conflict-9537.html
Winik, M., 2021. 7 Benchmarking Types for Better Business Decisions [+ Examples]. [Online]
Available at: https://www.similarweb.com/corp/blog/research/business-benchmarking/
benchmarking-types/

Management Accounting (Mac)

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Management Accounting (Mac)

Uploaded by

Copyright:

Available Formats

Unit 05/ MANAGEMENT ACCOUNTING

NILAKSHAN RAJASEKARAN / KBM322111 1|Page

NILAKSHAN RAJASEKARAN / KBM322111 2|Page

NILAKSHAN RAJASEKARAN / KBM322111 3|Page

01)Introduction to management accounting

How Does It Work?

A big part of management accounting is cost accounting. It evaluates the variable

01)The principles and responsibilities of the management

Management accounting supports managers in planning by giving data that

Ex-: Daryn's Dairy is a significant producer of organic dairy products in the

B) Decision making -In management accounting, decision-making can be

NILAKSHAN RAJASEKARAN / KBM322111 4|Page

Ex-: Choosing production facilities is one of the most common examples of

C) Budgeting - Budgeting is used in companies for a variety of purposes, with

Budgeting is the primary function of management accounting. Budgets serve as a

INCOME EXPENSES SURPLUS

Rs.120 million Rs.70 million Rs.50 million(+)

Rs.120 million Rs.150 million Rs.30 million (-)

D) Variance analysis -In budgeting and management accounting, variance

NILAKSHAN RAJASEKARAN / KBM322111 5|Page

BUDGET ACTUAL VARIANCE

INCOME $10,000 $8,000 $2,000(A)

EXPENSE $8,000 $7000 $1000(F)

Ex-: Monthly expenses of January

NILAKSHAN RAJASEKARAN / KBM322111 6|Page

Figure 1- Variable costs

NILAKSHAN RAJASEKARAN / KBM322111 7|Page

Figure 2- Fixed costs

NILAKSHAN RAJASEKARAN / KBM322111 8|Page

2) How cost behave in the short run and long run?

Figure 3- Cost behavior –Short Run

b) Cost behavior-Long Run

NILAKSHAN RAJASEKARAN / KBM322111 9|Page

Figure 4- Cost behavior- Long Run

Economic of sales -: The percentage change in cost is divided by the

Constant Returns to scale-: When an increase in input produces a

Diseconomic of sales -: When a corporation or business expands to the point

NILAKSHAN RAJASEKARAN / KBM322111 10 | P a g e

 "Cost benefit analysis" is one of the most necessary elements of management

NILAKSHAN RAJASEKARAN / KBM322111 11 | P a g e

Marketing budgeting -: A small business's marketing department is in charge of

ROMI (Return on Marketing Investment)

Return on Marketing Investment (ROMI) is a method to calculate the financial value

ROMI = ((marketing income – cost of goods – marketing expenses) / marketing

Manufacturing cost accounting includes everything that has to do with production

NILAKSHAN RAJASEKARAN / KBM322111 12 | P a g e

Ex-: Product-: Cup of coffee

Manufacturing Cost Standard quantity * Standard costing = Cost

(Fixed overhead) 1 minute $.0.10 per direct labor minute $.0.10

 Management accountants are huge amount of people of a company's financial

Because management accountants are involved in decision-making, they

Negotiating with suppliers

 When management accountants engaged negotiating with suppliers, they had to

NILAKSHAN RAJASEKARAN / KBM322111 13 | P a g e

NILAKSHAN RAJASEKARAN / KBM322111 14 | P a g e

Consider the following scenario: we have spent 5 cores on the prototype to

NILAKSHAN RAJASEKARAN / KBM322111 15 | P a g e

NILAKSHAN RAJASEKARAN / KBM322111 16 | P a g e

From - Assistant Accountant

Subject- Conflict Resolution and management Tools

Disagreement among two or more parties, including such individuals, groups,

Misunderstanding -: Misunderstandings are the biggest common cause of conflict.