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Management Accounting

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Management Accounting

 Management Accounting

Primary Causes of the loss in Net Income

On the basis of case study 1, it has been identified that the primary cause of loss in net income in financial year 2017 is the low production of the firms. The sales volume is less than the master budget for that reason net income of this firm has been reduced. On the other hand another main reason is to excess expenses in various fields such as advertisement, entertainment, and supply management generally reduces the net income level(Lucey et al., 2016).

Role of Management Controlling Expenses

The management of this company shows average performance in to control the overall expenses of this company because total expenses of this company was $627900 but the actual expenses of this company was $651000 so the total expenses exceed $23100 that generally reduce the profit percentage of the company.

Decision of Management

The management wants to compete in the market to earn more profit. The sales volume of this company was less in the financial year 2017. Promotion is one of the major factors to increase sales and marketing. For that reason this company has been chosen competitive strategies to increase Net Profit of Montana Farm.

Answer to Question No: (C)

On the basis of flexible budget report it ha been identified that, the primary cause of loss in net income is the low sales volume in the financial year 2017 that generally hamper the profitability of Montana Group. Apart from that the cost of feed for per unit hen is increased for that reason they overall feeding cost also increase. On the other hand, per unit nutrition and supplier cost also increase the overall expenses of this company that generally reduce the net profit of this firm.

Management of his firm showed poor performance in case of product selling or marketing. It is important for the firms to increase sells volume of the company and reduce the cost I proficient manner that generally help to increase profit percent of this company. Apart from that, firm has to maintain the suppliers cost to reduce the overall expenses of this company(Zhang et al., 2017). According to the flexible budget it has been identified that the management of this firm were not able to maintain per unit cost of these particular variable expenses that generally hamper the profitability.

On the basis of flexible report, it has been identified that there is no competitive approach of this group to reduce or maintain per unit cost of the product that generally help to increase net profit of this company. Net profit is (Sales volume – Total expenses) that means profit depend on sales and expenses(Manion et al., 2017). For that reason the overall performance of this company generally depend on competitive strategic approaches.

Recommendation

On the basis of annual budget of this company it has been recognized that that firm needs to implement different strategic plans to increase the overall growth of sales volume as well as profitability.

At first should maintain the per unit cost of products to maintain overall expenses such as total nutrition cost, total feeding cost etc. another factor is to increase sales volume of the firm. The sales of firm depend on product quality and proper marketing. On the other hand company has to invest more in the segment of marketing or advertising to increase the sales volume(Carrand Gratton, 2016). Apart form that production of egg of this company is less than expected so that proper nutrition is needed to increase the overall production of this company. These strategic Implementations also help to increase the overall profit of Montana firm.

References

Anderson, H. and Delano, J.D., 2016. Integrating 3D Printing and the Balanced Scorecard into the First Year Business Course.

Carr, L.P. and Gratton, S., 2016. Scorecard sustainability: Discovering the inflection point for business scorecard termination or major alteration. Journal of Corporate Accounting & Finance27(6), pp.29-41.

Fraser, A. and Rose, T., 2017. PWE-012 What is the best key performance indicator (kpi) for polyp detection at colonoscopy?.

Givoly, D., Li, Y., Lourie, B. and Nekrasov, A., 2017. Information Content of Key Performance Indicators and the Properties of Their Analyst Forecasts.

Lu, R., Wang, Y. and Kennon, R., 2016, April. Cross-Cultural Research for Luxury Fashion Brands in the Chinese Market: A Review of Long-Versus Short-Term Orientation in National Culture Dimensions. In Workshop on Business Models and ICT Technologies for the Fashion Supply Chain (pp. 25-32).Springer, Cham.

Lucey, M., O'reilly, M., Twomey, F., Conroy, M., Holmes, J., Moran, S., Sheridan, J., O'neill, A. and Saunders, J., 2016.The Association between Phase of Illness and Patient and Carer Outcomes. Is ‘time Spent in the Stable Phase’a Potential High Level Key Performance Indicator? The Results of a Prospective Observational Cohort Study of Consecutive Admissions to a Specialist Palliative Care Unit in Ireland. Palliative Medicine30(6), p.NP24.



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