Management Accounting

you will need to satisfy the criteria exactly as laid down in the Assignment Brief and as described here, but you should, wherever possible, use examples of information, budgets, costs, accounts, relevant to Human Resource Management departmental activities.

In most organisations the accounts and budgets of the HR department will be presented in a similar format to that used in the other functional, operational departments, but with slightly different titles and categories. As with most internal departments, the HR function will usually be categorised as a Cost Centre, rather than a Profit Centre (unless a system of Internal Pricing is in place) and this will influence the format of its accounts and budgets.

We strongly advise you to talk with your HR and Finance specialists to gain access to information for this assignment.

Assignment

Section 1

Explain how you would analyse cost information within a business

You will need to:

- explain how you would classify different types of cost

For this you need to describe the different cost types - such as fixed, variable, semi variable - and why certain costs are allocated to each cost type - for example Rent would be classified as a Fixed Cost.

- explain why you would use different costing methods

Here you need to briefly describe the different costing methods - such as job, standard, activity based, service, batch costing - and why, in what circumstances/types of organisation, would one be selected rather than another. Diploma in Human Resources Unit 6: Management Accounting

- explain how you would calculate costs using appropriate techniques

For this you will need to briefly describe the different techniques - such as absorption, marginal, cost plus - and how to use each one - ideally with one actual example.

- explain how you would analyse cost data using appropriate techniques

Here you will need to describe how, in what situations, you would use technique such as sampling, break-even, cost-benefit analysis.

Section 2

Explain what methods you would use to reduce costs and enhance value within a business

You will need to:
- explain how you would prepare and analyse a routine cost report

For this you need to show, using a real life example, how you would prepare a cost report - gathering data, selecting a report format, presenting the data, explaining variables, implications, and making recommendations.
- explain the use of performance indicators to identify potential improvements

Often known as Key Performance Indicators - you need to give examples of how these are used to maintain standards / quality levels / cost levels, and to generate improvements - such as when lowering the allowable wastage rate, or raising the targeted customer satisfaction level.

- suggest improvements to reduce costs, enhance value and quality

You will need to describe a workplace scenario - ideally in your own organisation - and recommend appropriate actions to bring improvements - such as find lower cost suppliers, automate processes, lower wastage levels, introduce quality management systems/procedures and performance indicators.

Section 3

Demonstrate and explain how you would prepare forecasts and budgets for a business

You will need to:
- explain the purpose and nature of the budgeting process

This is about the importance of managing operational income and expenditure activity in line with organisational strategies and objectives - forecasting, planning, monitoring, etc, over a set period. Give an example from your own or a selected organisation of this in action.
- select appropriate budgeting methods for an organisation and its needs

Ideally using (the whole or a part of) your own organisation or one you can research, very briefly describe methods such as Incremental, Zero Based, Programme, etc, and select and justify one of those.

- explain how you would prepare budgets according to the chosen budgeting method

Following on from the previous criteria - describe how you would prepare (gather data, forecast, plan, implement) that budget Diploma in Human Resources Unit 6: Management Accounting

- explain how you would prepare a cash budget

For many small organisations the Cash Budget is "the budget", but in larger organisations a Cash Flow budget is often prepared as a sub-budget - dealing only with, literally, cash - that is received from sales and lodged in the bank then consumed by operational activities. This is usually linked to a Cash Flow Forecast.

You should explain how (for a reasonably complex activity area) you would prepare one of these.

Section 4

Demonstrate how you would monitor performance against budgets within a business

You will need to:

- how would you calculate variances, identify possible causes and recommend corrective action

You will need to briefly describe the types of variances, what might cause them, and recommend action that will eliminate or minimise the variance. For example, if office equipment maintenance costs vary widely from month to month, then appropriate action might include staff usage training, and-or renewal of equipment, and-or a planned preventative maintenance schedule.
- howwould you prepare an operating statement reconciling budgeted and actual results

The operating statement is simply a reconciliation statement, listing actual income and expenditure against budgeted (forecast) income and expenditure. Select a period of at least one month, ideally for an activity area within your own organisation (or a suitable researchable one) and prepare such as statement, adding comments, explanations, where appropriate.

- explain how you would report findings to management in accordance with identified responsibility centres

Ideally using your own organisation (or a suitable researchable one), identify a Responsibility Centre - sometimes known as Cost Centres or Profit Centres, and sometimes not labelled at all but they do exist - check with your line manager or Finance department - and describe it, and prepare a simple report on its current budget performance (if appropriate you can use the findings from the operating statement in the previous criteria).

Don't forget that you also need to add a list of Sources of Information-References showing any books, websites, articles, case studies, reports, internal documents, people interviewed, that you drew on to complete this assignment.

The Sources of Information-References are not included in the Word Count.