Management Accounting – Assignment

(COOLMan Pvt Ltd.)

BSc (Hons) Human Resource Management

&
Organisational Behaviour

(18 Months)

By
Kaveen Nester Silva pulle

Human Resource Management Institute

Central Campus 205, De Seram Place, Colombo 10, Srilanka.
2022
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Assessor Feedback : Initial Submission

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Assessor Feedback : Redo Submission

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 Content

1) Executive Summery.

2) Company Overview.

3) Part I:

Compare and contrast the three management accounting planning tools, highlighting which is more
successful and providing examples of each.

4) Part II:

Compare how management accounting is implemented, its efficiency in resolving financial issues,
and its ability to prevent financial issues in businesses using particular case studies as examples.

5) Conclusion & Recommendations.

6) References.

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 Executive Summery

An organization can decide whether to continue its current operations in the future depending on its
performance using financial and managerial data. This research provides business case studies of how
management accounting has reduced fraud and demonstrates how to use organizational planning tools
to ensure financial stability and performance. Let's look at how to recognize and effectively address
financial issues.

Two key sections make up this report.

 By Part I, portion Company examples show how useful it is to evaluate each of the three
design tools used in management accounting, as well as the rationale behind such evaluations.
Using an example from a particular firm,

 Part II, analyzes the efficiency of management accounting in resolving and avoiding financial
issues in enterprises. Finally, based on the chosen COOLMan (Pvt) Ltd. outline, in addition
to the lessons I gained in the Management Accounting module, the significance of the
Management Accounting and its useable tools, its pros and disadvantages are addressed.

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COMPANY DESCRIPTION

COOLMan Company (Pvt) Ltd is established in 1998, with the objective of supply and
installation of ice plants in Sri Lanka, and later focus was diversified by design, supply,
installation, commissioning & maintenance for industrial ammonia refrigeration sector.

There are 50 employees working in the COOLMan Company excluding staff members. General
Manager, Factory Manager, Marketing Manager, Production Manager, Assistant Manager Human
resources & Head of purchasing is the main management in COOLMan [pvt] Ltd. Total Structure
of this organization can be display in a chart, Background of the Organization Products or
services & Customers or market Segment COOLMan Company is a leading as a COOLMan Ice
Factory and as well as CM Fish Canning & CM Blue Crab (Seafood) manufacturing company
in Sri Lanka.

They develop Can Fish their product for local market. And they are manufacturing Blue Crab
for local market as well as for foreign market.

Customer could buy their products in any Supermarket Chain in Sri Lanka. And also, COOLMan
Company develops their products for Export market as well For USA. These Products are
exporting under COOLMan Company logo.

As a example UK market will only accept HACCP Certified Products. HACCP is kind of a Green
Concept.

COOLMan has all those Certifications and annually they are updating it. And also, COOLMan
Company has HACCP Certification and ISO 22000 and EU Regulations as well.

Like that COOLMan Company had wide range of a market share in Sri Lanka. Because
COOLMan company can fish are fully secured & Environment friendly products in Sri Lanka.

And also, they had the best prices in the local market and also export market. Because of the
quality of the product and the certificates they have for their product.

COOLMan is hosting that responsibility in a very good manner.

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VISION

COOLMan is committed to seeking growth and prosperity by achieving a sustainable competitive

share of refrigeration and fishery industry in Sri Lanka. We will strive to reach our goals by
meeting the needs and expectations of our customers with continuous improvements in quality,
productivity, value, new product offerings and customer Satisfaction.
It is our intent to develop quality partnerships with our employees, suppliers, customers and the
community in which we operate. We wish to continually set standards of excellence, both
personally and professionally, which exemplify our dedication to our goals and to the full
filament of the vision statement.

MISSION

COOLMan is dedicated first and foremost to the production or supply of the highest quality
products to meet the needs and demands of our customers while achieving an acceptable return
on investment. This will be realized both internally and externally by continuous communication
between management, employees, suppliers, customers and community and by on-going
improvement of process, systems, equipment and use of human resources. We intend to expand
our presence in the marketplace by the development of new products in our lines as well as by
exploration of other opportunities for growth when presented.
Same as we are creating a suitable neighborhood for the community by promoting eco-friendly
machineries which reduce the global warming.

MAJOR PRODUCTS

Seafood, Canned Fish & Blue Crabs, Fish meals, Fish Oils, block ice and engineering
services.

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Compare and contrast three planning tools used in management
accounting, indicating how effective you judge each to be and
why. Your judgments should be supported by evidence.

Analysis of Financial Statements

Financial documents such as the profit and loss account and the balance sheet are crucial. These
assertions are examined for various time periods. This form of analysis aids management in
determining the rate of growth of a company. Comparative financial statements, common size
statements, and ratio analysis are used in this analysis. Also, Annual (biennial, quarterly, or monthly)
financial statements are financial data records that a firm releases. These records include the
company's net worth, which is calculated using assets and liabilities, as well as expenses, earnings,
and an operational budget. but there are disadvantages and advantages to using this method
.

ADVANTAGES.

Review of Company Liability

The existing liabilities are shown in the financial statements. These include business loans, lines of
credit, credit cards, and vendor credit. Before applying for a business expansion loan, a business
owner should review his financial statements to see if he needs to reduce existing liabilities. Lenders
examine the financial statements, taking into account the revenues, assets, and existing liabilities
.
Identify Trends and Determine Next Steps.

Analyzing financial statements from quarter to quarter and year to year assists business owners in
identifying growth trends. A New company may incur losses in its early years as it develops products
and a customer base. Statements show whether the business owner is meeting projected estimates at
the same time.

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DISADVANTAGES.

One drawback of using financial accounts to make decisions is that the facts and figures are based on
the current market. Executives should not expect that the statistics from a previous financial statement
will remain the same or increase because the market might change swiftly.

-One-Time Analysis

Another disadvantage is that a single financial statement only shows how a company is doing at one
single time. The financial statement does not show whether the company is doing better or worse than
the year before, for example.

Cash Follow Statement.

The Cash Follow Statement depicts the changes in a company's financial position as a result of cash
'inflows' and 'outflows.' For short-term business activities, such 'Inflows' and 'Outflows' must be
analyzed. The main goal of creating a 'Cash Flow Statement' is to highlight and emphasize the
changes that have occurred in the 'cash position' over time.

ADVANTAGES.

1. It makes it easier to assess a company's ability to meet its fixed costs.

2. It can be used to compare the changes in 'Cash Position' between 'Profit & Loss Account' and
'Balance Sheet' items over two consecutive accounting periods.

3. The disclosures made by the 'Cash Flow Statement' allow a business enterprise's management to
initiate preventive measures in financially difficult situations.

4. Using 'Cash Flow Analysis,' it is possible to identify 'Discretionary Cash Flows' from business
transactions.

DISADVANTAGES.

1. Non-cash transactions are ignored: Cash flow statement focuses only on cash inflows and
'outflows'.

Non-cash transactions, such as the purchase of a building by issuing shares/debentures to the vendors
or the issuance of bonus shares, are not covered.

2. Not a Substitute for an Income Statement: A business organization's 'Income Statement' covers
both 'Cash' and 'Non-Cash' items and reveals the 'Net Income.'

The 'Cash Flow Statement, on the other hand, considers only 'Cash Flows' and thus can only
show 'Net Cash Flows' inflows or outflows. It is not permitted to disclose the organization's 'Net
Profit/Loss.'

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Compare how management accounting is implemented, its efficiency in
resolving financial issues, and its ability to prevent financial issues in
businesses using particular case studies as examples.

Workers and equipment are coupled in manufacturing firms. They are employed in the production of
finished items from raw materials. Some producers, like Boeing, sell their goods directly to
customers. For instance, Aromek Products sells its raw Items directly to customers and merchants.
Both Beverages and Motor parts sell their goods to merchants, who then pass them on to customers.

Companies use three separate inventory accounts in line with management accounting in order to
carry out this operation properly.

Instead than concentrating on financial management, management accounting focuses on current

performance inside the organization. As a result, it makes it easier to compare the company's long-
and short-term goals. These details can be used by managers to identify budgeting problems.
Financial reports are provided by management accounting to internal stakeholders. They are able to
make day-to-day decisions immediately as a result.

Furthermore, management accounting documents the pertinent reports that are used to address
challenging challenges and offers information about the company's financial status.

Finally, the improved services benefit the clients.

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 CVP Analysis

Simply put, Cost Volume Profit (CVP) analysis is the core tool since it enables COOLMan Company
to assess the effects of any changes to the company's costs and profits. CVP analysis is necessary for
profit planning. In a CVP study, COOLMan Company accountants recognize that a number of
interrelated variables, including a brush's sales price, variable costs per brush, and sales volume, have
an impact on the company's profitability.

The CVP analysis evaluates the relationships among these interrelated variables and the effects of
changing these variables on the revenues of COOLMan Company.

In this study, fixed costs and variable costs are separated. It determines the levels of activity when
expenses and revenues are equal. The CVP analysis is an established approach used to make
management choices such as calculating brush selling prices, figuring out brush production costs, and
choosing the optimal product mix. They intend to use production facilities to their fullest potential
usually, finding the company's break-even point is the first step in such an examination. An essential
component of the whole CVP analysis system that provides executives and accountants with a wealth
of information for profit planning is breakeven point analysis.

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 Conclusion & Recommendations.

Many businesses utilize management accounting, an integrated accounting system, to ensure the
accuracy of their information and to use it to make the best decisions possible. Management
accounting is crucial for achieving greater corporate earnings and greater customer satisfaction.

This study shows how the COOLMan Company, a well-known brush company, uses management
accounting to accomplish its objectives. In accounting procedures, a variety of management
accounting instruments is employed.

This paper focuses on three key planning tools that COOLMan Company relies on the most. Given
that each instrument has advantages and limitations, COOLMan Company can choose from among
the three depending on the results.

 Employee cooperation helps the company's management accounting procedures. Managers

must consistently be able to show that they can function as an effective team player.

 Managers need to have a general understanding of business principles and accounting.

 Utilize strong communication techniques. Managers can readily discuss and summarize the
financial data as a result.

 Improving financial management. It resulted in enhanced oversight of budget compliance.

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 References.

Importance of Break-Even Analysis for the Micro, Small and Medium Enterprises. International
Journal of Research-Granthaalayah, 8(6).

An income statement teaching approach for cost-volume-profit (CVP) analysis by using a company’s
CVP model. Journal of Accounting and Finance, 11(4), pp.23-36.

Penetration pricing strategy and performance of small and medium enterprises in Kenya. European
Journal of Business and Social Sciences, 2(9), pp.114-123.

Cost Analysis for Decision Making and Control: Marginal Costing versus Absorption Costing. SSRN
Electronic Journal, 4(1).

Psychology of pricing: A review and suggestions. Handbook of hospitality marketing management,

pp.375-402.

J. and Chiang, W.Y.K., 2020. Durable goods pricing with reference price effects. Omega, 91,
p.102018. .

L. and Ihantola, E., 2011. Reporting Methods in Management Accounting Field Research. SSRN
Electronic Journal, 24(4).

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