Reference no: EM132313721

Learning Outcomes:

LO3 Explain the use of planning tools used in management accounting

LO4: Compare ways in which organisations could use management accounting to respond to financial problems

P4 Explain the advantages and disadvantages of different types of planning tools used for budgetary control.

M3 Analyse the use of different planning tools and their application for preparing and forecasting budgets.

P5 Compare how organisations are adapting management accounting systems to respond to financial problems.

M4 Analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success.

D3 Evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success.

Task Summary

Case Scenario

ABC Company makes and sells a range of laptops. The directors are concerned that ABC Company has recently faced increasing competition. Consequently, there have been issues concerning decline in revenue, increase in closing stock, increase in receivables movement, concerns related to some relevant ratios and adverse variances.

The directors of ABC Company are reviewing the annual report and other management reports and they want company's management accounting team to prepare relevant budgets for six months ended December 2019, calculate relevant financial ratios considering benchmarks, key performance indicators and budgetary targets, identify variances for last two years , apply relevant strategic planning tools , financial governance to monitor strategy, management accounting skill sets and effective strategies and systems and compare the ways in which Company can respond to financial problems effectively and efficiently.

ABC Company's financial statements and budgeted information are attached below: (For details refer to attachment)

A. Statements of financial position as at 31st December

B. Statements of profit or loss for the year ended 31st December

C. Benchmarks - Average data for companies similar to ABC Company

D. ABC Company- Budgeted information for the financial year 2018 & 2017 , no change in actual units & budgeted units produced and sold:

E. ABC company has provided you with the following budgeted information related to cash budget , budgeted income statement and budgeted statement of financial position for the last six months ended 31st Dec 2019

As a member of Management accounting team of ABC Company, you are required to evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organization to sustainable success.

Attachment:- Planning tools used in management accounting.rar