Management Accounting Assignment - Excite Entertainment

Management Accounting
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Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
P1. Explaining management accounting and essential requirements of the various
management accounting systems. ..............................................................................................4
P2. Explaining several methods used for management accounting reporting. ..........................6
M1 & D1. Evaluating the benefits and the application of management accounting systems
within the organization................................................................................................................7
LO2..................................................................................................................................................9
P3 Calculation of marginal absorption costing...........................................................................9
LO 3...............................................................................................................................................11
P4. Budgetary control planning tools with advantages and disadvantages...............................11
M3. Application of different planning tools..............................................................................13
LO 4...............................................................................................................................................14
Part A.........................................................................................................................................14
P5 & M4 Adaption of management accounting system for solving financial problems to
achieve organisational success..................................................................................................14
Part B ........................................................................................................................................16
Cost profit volume analysis.......................................................................................................16
CONCLUSION .............................................................................................................................17
REFERENCES..............................................................................................................................18
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INTRODUCTION
Management accounting means the methods and the concepts that are necessary for
making effective planning, for selecting the best course of action among various alternatives and
for controlling by the interpretation of the performances. The present study is based on Excite
Entertainment, Operates in the business of leisure and the entertainment industry in the UK. The
main activities of the firm include the promotion of the concerts and the festivals at several
locations throughout UK. Furthermore, the report describes the difference between management
accounting and financial accounting with the essential requirements of the systems of
management accounting. The report also includes the different methods that are used by the firm
and the calculation of the profits by applying marginal and absorption costing. Moreover, the
study explains about different planning tools of budgetary control and the technique used for
resolving the financial problems in the organization.
MAIN BODY
LO 1
P1. Explaining management accounting and essential requirements of the various management
accounting systems.
Management accounting is the branch of accounting that facilitates the information to the people
that are present in Excite entertainment. However, financial accounting is majorly evaluated for
communicating both internal and the external users that is the stakeholders. Management
accounting aims for providing the quantitative as well as the qualitative information to managers
which enables them in making decisions so that profits could be maximized. Financial
accounting focuses on providing the true and the fair view of the financial performance and the
position of Excite entertainment to several parties (Messner, 2016). Management accounting is
not compulsory as per the laws for the enterprise while financial accounting is compulsory in
accordance with the laws for each and every firm. Management accounting includes both type of
information monetary and non-monetary whereas financial accounting includes only the
monetary information.
Essential requirements of the management accounting systems-
Cost accounting systems- It is the framework that is required by Excite entertainment for
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estimating the cost in terms of their products for analyzing the profitability, valuing the inventory
and for cost control (Gaynor and et.al., 2016). Anticipating the cost of the products is crucial for
the making the operations profitable as it enables the firm in knowing the products that are
profitable and unprofitable or irrelevant. This can only be ascertained by estimating the correct
and the true cost of product. The two major cost accounting systems includes the job order
costing and the process costing.
Job costing- It is the system that assigns and accumulates the manufacturing costs for
each of the job. It is the most suitable approach for Excite entertainment as it deals in event
management.
Process costing- the system of cost accounting that accumulates the manufacturing cost
for each of the process within the firm (Francis and et.al., 2015). It is appropriate in for the
enterprise in evaluating the cost involved in different departments and the flow of the cost from
one division to the another.
 Direct costing- This method is the specialized form that analyzes the cost using only the
variable costs for making the decisions. It never considers the fixed costs that are
assumed to be attached with the time in which they had been incurred. Such cost
disappears when the production line is been shut down. Standard costing- It is the accounting system that is used by Excite entertainment in
identifying the variances between the actual and the budgeted figures (Drake, Roulstone
and Thornock, 2016). It evaluates the difference between the actual cost of the product
that were to be produced and the cost that could have occurred for actual production of
the goods.
Inventory management system- This system of management accounting is adopted by Excite
entertainment for supervising its non-capitalized assets and the stock items. An element of the
supply chain management, this system supervises the flowing of the goods from the
manufacturer to the warehouses and this leads to point of the scale. It is very important for the
firm as it enables them in tracking the level of the inventory, sales, orders etc (Usenko and et.al.,
2018). For maintaining the optimum inventory in the organization so that it can meet its needs
and could remove the over and the under inventory which can affect the financial figures.
Job costing systems- It includes the process of accumulating the information relating to the cost
attached with particular job or production unit. This information is required by the firm for
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