Management Accounting: Concepts, Systems, and Reports

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1. Explaining concept of the management accounting and significance of its systems ...........3
P2. Describing several kinds of the MA reports .........................................................................4
M1. Evaluating different benefits of the MA systems ................................................................5
D1. Critically evaluating the ways in which MA systems and the reporting must be integrated
within the operational process of Excite Entertainment .............................................................6
D2. Explaining the reasons behind the presentation of an information need to be reliable,
accurate and updated....................................................................................................................6
LO2..................................................................................................................................................7
P3. Calculating the profits by employing appropriate techniques ..............................................7
LO3..................................................................................................................................................9
P4. Evaluating benefits and the limitation of different planning tools that are been used for the
budgetary control ........................................................................................................................9
M3. Analysing uses of the various planning tools for framing the budget................................11
LO4................................................................................................................................................12
P5. Comparing the ways in which an organization adapts MA systems in resolving the
financial problems .....................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting means a practice of managing the internal work environment
through preparation of the reports and application of the planning tools and systems. The present
study is based on Excite Entertainment, an entertainment and the leisure industry in UK.
Furthermore, the study highlights concept of MA and its systems with presenting different
reports. It also includes computation of the profits by using absorption and the marginal costing
technique. Moreover, it includes various planning tools adopted by business and MA techniques
in resolving the financial problems.
LO1.
P1. Explaining concept of the management accounting and significance of its systems
MA is stated as presentation of an accounting information fro the purpose of framing
policies that needs to be used by management and enables in smooth working of the routine
activities (Bataineh, 2018). It helps an internal management in performing all the managerial
functions involving planning, staffing, organising and controlling.
Difference between financial accounting and management accounting
Management accounting Financial accounting
It refers to an accounting system that facilitates
appropriate information to managers in
framing policies, strategies and the plans in
running the business effectively.
It means the system that emphasize on
preparing final report of an entity in order to
facilitate financial information to the interested
users.
It acts as the main branch of an accounting that
reports and records financial as well as non-
financial information of an enterprise.
This accounting branch keeps a track of only
the financial information of the company.
It is seen as entirely different from financial
accounting as it provides an information to the
people within an enterprise.
It mainly facilitates information to the
outsiders.
There does not present any prescribe format in
relation to management accounting.
On the other hand, financial accounting needs
to be done in the prescribed format.

It focuses on the facilitating an information for
helping it in evaluating performance and in
devising the plans for future concern
(Difference between MA and FA, 2017).
It emphasize on providing an information
regarding the functioning of an entity's
business to users.
Under this, an information need not to be
audited or published as it is only for an internal
use.
Under financial accounting, an information
need to be audited or been published by the
statutory auditors.
Essentials of MA systems-
Cost accounting system- It is the framework that is been used by an enterprise in
estimating cost of of the products for the purpose of making profitability analysis, controlling
cost and valuation of an inventory (Ellegård and Glenngård, 2019). It is very important for
Excite Entertainment in making use of this system as it helps in anticipating the accurate product
cost that tends to be critical for gaining the profitable operations. For instance- Job order costing,
process costing, standard costing etc. There are different costing techniques that helps in
ensuring control over cost that are as follows-
Standard costing technique- This technique comprises of setting the predetermined cost
estimation or budgeted cost and compares it with the actual cost for analysing the variances.
Process costing- It is the technique that the firm uses for producing its products with a
well defined process for each and every type of the product.
Direct cost- It means the cost that are incurred for the particular or specific cost unit,
department and the process. For example- wages, raw material cost etc.
Accounting standards cost- It means an estimated expense which occurs in the
production of the product or the service performance.
Inventory management system- It means a system that involves combination of the
technology, processes and the oversees maintenance and the monitoring of the stocked products.
This system is critical for Excite Entertainment in keeping the tabs on the present stock level and
in understanding the items that moves on a quick basis and the items that are slow-moving. It
helps the company in determining the re-order period with a greater level of accuracy. For
example- LIFO, FIFO, ABC analysis etc.