Management Accounting in Ever Joy Enterprises

MANAGEMENT ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Explaining management accounting and different type of management accounting system.....3
a. Presenting difference between Management Accounting and Financial Accounting.............3
b. Cost accounting system:..........................................................................................................4
c. Inventory Management System:..............................................................................................5
d. Job costing system:.................................................................................................................5
e. Explaining different methods used for management accounting reporting............................6
f...................................................................................................................................................7
TASK 2............................................................................................................................................7
Calculating the income statement using absorption and marginal costing techniques of
accounting method......................................................................................................................7
TASK 3............................................................................................................................................8
a. Explaining the advantages and disadvantages of different types of planning tools used for
budgetary control........................................................................................................................8
b. Comparing how organisations are adapting management accounting systems to respond to
financial problems.....................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Management accounting is important concept for an organisation. It help the
management of the organisation to make important decisions with the relevant information
provided by the different departments. In a competitive corporate world, having effective
management accounting system is crucial to be remain competitive in the market. The
management accounting system and reporting helps in efficient running of financial and other
business activities in organisation.
The present report is based on Ever Joy Enterprises, which will help it to understand the
importance of having an effective management accounting system in organisation. The present
report will discuss the importance of management accounting system and different types of
accounting system. Further, the report will demonstrate different type managerial accounting
reporting and its importance in company. The report than include a calculation of net income
with different accounting techniques. Furthermore, the report will ,depict about the advantage
and disadvantage of planning tools for budgetary control. At last, the report will discuss how
management accounting system can help the company to resolve its financial problem.
TASK 1
Explaining management accounting and different type of management accounting system
a. Presenting difference between Management Accounting and Financial Accounting.
It is the process of preparing and providing the information regarding financial and
statistical to the higher authority of management so that they make the strategies and decisions
regarding the long term as well as the short term managerial decisions (Kaplan and Atkinson,
2015). It helps the management of the company to perform their basic functions like planning,
organising, managing and controlling of the overall business activities so as to achieve their
overall business objectives.
The difference between management accounting and financial accounting are:
Management accounting Financial accounting
It is an accounting system that are prepared to
provide the information to the manager to
It is the accounting system that are focuses on
preparing the financial statement of the

make policies, plans and strategies for the
efficient business operations.
organisation for the internal as well as the
external users to provide information of the
company's financial performance.
Management accounting provides monetary as
well as the non-monetary information of the
company also.
Financial accounting provides monetary
information of the company only.
Management accounting's main objectives is to
assist the management in providing the
information which helps in decision making
process of company.
Financial accounting main objective is to
provide information about the company's
financial performance to the outside users like
shareholder, investors, auditor, government etc
(Hilton and Platt, 2013).
Management accounting can be prepared at
any time when required and as per the need of
management.
Financial accounting re prepared at the end of
each accounting year.
Management accounting system is essential for the Ever Joy enterprises, so that the
management can make the effective decisions and policies to increase the company' future
performance. The management can take the company's financial information to develop the
report for making decisions. The management accounting system helps the company to make
more effective decisions from the information and reports. Management accounting system
focuses on the costs that are associated with the production of goods and services in an
organisation. There are different types of management accounting system that can be used by
Ever Joy enterprises. They are:
b. Cost accounting system:
It the method of evaluating a company's cost in producing a single product by evaluating
its overhead costs and fixed cost (Ward, 2012). The company analyse the cost to know the
profitability analysis, inventory valuation and controlling of the cost incurred. Its important for a
company to know the profitability of the product, which can be ascertained when the actual price
of the product will be estimated. Cost accounting system are of two main types they are: