Lauren White
Unit 7: Management Accounting
Task 3
Forecasting and Management Planning
P3 - Use accounting data and statistical information to measure business
performance.
P4 - Use budgetary techniques to prepare budgets for a selected
organisation.
P5 - Describe how budgets can be used to set targets to monitor and control
an organisation.
M2 - Analyse the importance of accounting data and statistical information
to assess and predict business performance.
M3 - Analyse the impact on a budget of changes in costs and selling prices for
a selected organisation.
It is important for a business to use historical data as it gives them an idea on how
successful they are as a business. They are able to analyse the areas where they can make
improvements and where they are already performing well. The demand for their products
can be identified which is very useful information as it shows the growth of the business
each year. A business would need to be able to forecast for the next period meaning the
accountants of the business would need to use moving averages in order to do this. The
moving averages show how well the business is performing meaning changes can be made
in areas that need it. Previous figures from previous years are used in order to calculate
trends within the data. Therefore, the average change can be calculated and analysed. The
moving averages would be useful to accountants as they are able to analyse trends within
the market and see how the demand for certain products changes. This would be important
information for a business to be aware of so they can adapt their activity accordingly. It is
important that data is used from many different years to ensure that a true indication of the
businesses performance can be identified analysed. If data from only one year was used
then issues within the business may not be identified which could potentially be damaging.
The trends can be analysed far more effectively if data is used from multiple years in order
to successfully see how the business is performing.
The Royal Jam Companies incomes does fluctuate which can be seen using the moving
averages calculated for the company’s net income. The increase between 2000 and 2007
was positive which would also mean the sales would be increasing which would have an
effect on the costs of the business. The costs are likely to increase if the sales and income do
due to the demand for their product increasing. The costs for the production of their
product would be higher as they need to cope with the demand. The Royal Jam Companies
average income decreased between 2007 and 2011 which may be a concern for the
business but their sales did remain high during this period meaning the demand for their
product was still high. Their overall income did also change between 2008 and 2013 as it
was good in 2008 but decreases from 2009 to 2013. Despite this, their costs stay between 1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lauren2120. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.03. You're not tied to anything after your purchase.