Management Accounting: Systems and Reports

Management accounting.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
SCENARIO 1...................................................................................................................................3
Section A................................................................................................................................3
A) Difference between management and financial accounting .............................................3
b. Cost accounting system:.....................................................................................................4
c. Inventory management system:..........................................................................................4
d. Job costing system:.............................................................................................................5
E Evaluating the benefits of management accounting systems..............................................5
Section B................................................................................................................................6
B) Describing different types of managerial accounting reports............................................6
b. Explaining why information should be presented in accurate and reliable manner...........7
c. Critically evaluating how management accounting systems are integrated with reporting
aspects.....................................................................................................................................7
SCENARIO 2...................................................................................................................................7
Preparing income statements using absorption and marginal costing system........................7
SCENARIO 3.................................................................................................................................11
Part A) Advantages and disadvantages of three planning tools...........................................11
Part B) Comparing management accounting system with respect to financial problems....13
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Management accounting is that branch of accounting which takes into consideration all
financial information gathered through financial accounting in order to take decision for
management of company. For business to be successful it is very necessary for companies to
effectively use the management accounting system in order to manage all operations of business.
Management accounting helps company in analysing all financial information and then after
analysing internal errors and related information assess the financial position of company.
Present study is made on Excite Entertainment Ltd company, which is a British media company
and operates in leisures and entertainment industry in UK. The main objective of report is to
understand system and reports of accounting for management.
Current report will start by outlining the different accounting system of management
accounting along with a discussion over various type of reporting for management accounting
information. In the next part marginal and absorption costing will be illustrated with help of
some calculations. Moreover, further discussion will take place on variety of planning tools used
in budgetary control. In the end comparison of system of management accounting to solve
different kinds of financial problems will be discussed.
SCENARIO 1
Section A
A) Difference between management and financial accounting.
Managerial accounting is a series of steps which needs to be followed in order to analyse
financial information and then critically evaluate it to take some decision for development of
business (Bromwich and Scapens, 2016). In against of this financial accounting is defined as
recording of all transaction which are financial in nature and then are posted in ledger accounts
in order to ascertain financial profit for loss suffered by company. Difference between
management and financial accounting are as follows:
Management accounting Financial accounting
Accounting for management takes into
consideration what are the issues within the
business and analysing the measures for
Monetary or financial accounting report on the
profitability of the business.

overcoming those issues.
This is not covers under the laws and
regulations.
This is governed by standard, laws and
regulations (Difference between financial and
management accounting, 2018).
Major objective of accounting for management
is to help internal management for taking
decisions.
This help creditors and investors take
investment decisions.
Management accounting system:
This system tries to help Excite entertainment in order to properly manage their
production and other decisional areas. The major reason underlying this fact is that management
accounting helps in clearly evaluating all the options available and then selecting the best suited
option.
b. Cost accounting system:
this is a system which enables company in order to estimate the cost of the product which
needs to be charged by consumers after proper analysis of inventory cost, production cost and
other different cost incurred. This turn helps the organization for determine profitability and
revenue of Excite Entertainment company by including such activities like WIP that is work in
progress, and the resulting goods which are to be delivered to ultimate consumer. This system is
mainly use for identify and fix cost for different products and services of production department
(Bui and De Villiers, 2017). This labour cost, different indirect and direct cost expenses of
overhead. This includes two types of costing which explains below: Direct costing: this is the cost which is directly levied on the production og goods and
services. For instance, all the direct material, direct labour, wages, manufacturing
expenses are examples of direct costing
 Standard costing: This is the system which is helpful for manufacturer in order to find
the deviation among actual cost and cost of production.
c. Inventory management system:
inventory management system is a type of system which is used in order to mange the
different types of inventory which is used for production by Excite entertainment. Without