Management Accounting and Costing Techniques

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
SECTION A.....................................................................................................................................1
(a) Comparison between MA and financial accounting.........................................................1
(b) Cost accounting system....................................................................................................2
(c) Inventory management system..........................................................................................2
(d) Job costing system............................................................................................................2
(e) Benefits of above mentioned accounting systems............................................................2
SECTION B.....................................................................................................................................3
(a) Different types of managerial accounting reports.............................................................3
(b) Why information should be accurate, relevant and up to date..........................................3
(c) How MAS and MA reports integrated with operational process......................................4
TASK 2............................................................................................................................................4
Calculation using Absorption Costing or Marginal Costing Method.....................................4
TASK 3............................................................................................................................................6
PART A...........................................................................................................................................6
Budgeting...............................................................................................................................6
Break even analysis................................................................................................................7
Standard costing.....................................................................................................................7
Variable analysis....................................................................................................................8
TASK 4............................................................................................................................................8
PART B............................................................................................................................................8
Contribution margin...............................................................................................................8
Break even point.....................................................................................................................9
Units to achieve......................................................................................................................9
Sensitivity analysis.................................................................................................................9
Assumption of break-even point analysis.............................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Management accounting is regarded as the method of formulating managerial reports as
well as accounts which facilitates relevant and on time statistical data to managers for making
the long term and short term decisions. This finds evaluate, examine, interprets as well as
communicates information for enabling an entities to meet their objectives (What is Management
Accounting and its Importance, 2020). As per the given scenario, the undertaken organisation for
this report is Excite Entertainment Ltd. Which operates into entertainment as well as leisure
sector within United Kingdom. The topic which is going to covered in this report are differences
among financial and management accounting, cost accounting system and its benefits, many
kinds of managerial accounting reports and preparation of financial reports using costing
techniques. Apart from this, comparison among three planning tools and ways in which
management accounting system is applied are also discussed in this report.
TASK 1
SECTION A
(a) Comparison between MA and financial accounting.
As management accounting is differ from the financial accounting (Akhmetshin and
Osadchy, 2015). As financial accounting facilitates information to internal and external
stakeholder of organisation so, comparison among both accounting are discussed below:
Basis Management accounting Financial accounting
Aim The aim of management accounting
is to formulate internal report so that
firm's managers may develop
effective decisions.
The aim of Financial accounting is
to formulate financial statement for
expanding information related to
monetary position to stakeholders.
Information It depends upon two kinds of
information which is related to
statistical and non statistical aspects.
It only depends upon the financial
information.
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(b) Cost accounting system
This is regarded as the type of management accounting system that is in respect for
developing future projection spendings as well as managing whole costs. It is crucial for entities
to use this into its practices so that variance and exact cost may be calculated. In absence of
respective accounting system, this become tough for them to overcome from unfavourable
variances. Moreover, it is not only restricted to this within it the standard and direct costs are also
managed effectively. So, this is being used into Excite Entertainment Ltd with an intent to
manage cost of various practices regarding conducting any events.
(c) Inventory management system
This is regarded as accounting system which is associated with methods of managing as
well as controlling several types of inventory quantity such as raw material, development of
goods and others (Borker, 2016). This depends upon some stock valuation techniques that are
FIFO, LIFO and many more. This is crucial for firm as it aids them to keep inventory level
updated on regular basis in order to identify how much inventory is utilised for producing goods
as well as how much raw materials quantity is there in warehouse. So, Excite Entertainment Ltd
event manager may use this system for tracking various musical instruments availability.
(d) Job costing system
This is define as a kind of accounting system which is related with computing job cots
individually. It is essential for entities to understand how much cost have been incurred in
accomplishing any specific activities. In job accounting system, many kinds of costs are
computed like direct material cots, labour cost and others. Such as within Excite Entertainment
Ltd., this respective system is used with an intent of facilitating detailed data to its finance
department regarding job costs.
(e) Benefits of above mentioned accounting systems
The above mentioned management accounting system have various benefits which is
described below: Cost accounting system: It is an accounting system which depends upon computing as
well as managing whole expenses (Osadchy and Akhmetshin, 2015). For this within
Excite Entertainment Ltd, its finance manager perform relevant assumptions regarding
future cost as well as keeping control over unnecessary expenses.
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