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Management Accounting report for Ever Joy Enterprises

   

Added on  2020-12-10

23 Pages5593 Words325 Views
Management Accounting report for EverJoy Enterprises (UK)1

Table of ContentsIntroduction....................................................................................................................................................................3Task 1................................................................................................................................................................................3Management Accounting systems...............................................................................................................3a. Differences between Management Accounting and Financial Accounting.............................5b. Cost accounting systems (Direct Costs and Standard Costing)...................................................7c. Inventory Management Systems.............................................................................................................7d. Job costing systems.......................................................................................................................................8e. Different types management accounting reports............................................................................9f. The need for a sound accounting system and the importance of the department producing timely, accurate and relevant information......................................................................10Task 2.............................................................................................................................................................................11a. The number of tickets that must be sold to break even (i.e. the point at which there is neither profit nor loss)..................................................................................................................................11b. If we want to make a profit of £30,000.00, how many tickets should be sold? ................12c. What profit would result if 8,000 tickets were sold? ...................................................................13Task 3.............................................................................................................................................................................14a. You are to evaluate how budgeting can be used by Ever Joy Enterprises as a planning and problem-solving tool in dealing with financial problems, but also for leading the organization to sustainable success.........................................................................................................14Conclusion....................................................................................................................................................................20References....................................................................................................................................................................212

IntroductionManagement accounting is an integral part of the enterprises which helps them to achieve theirgoals and objectives in an effective and efficient manner. This report will be prepared to reflectand discuss the concept of managerial or management accounting and write a reference in thecontext for EVER JOY ENTERPRISES (UK) that operates its business operations in leisureand entertainment industry in the UK. This report defines the concept of job costing systems,cost accounting systems and inventory management systems and its usage in the enterprises.This report will also solve the given problems to assist the Ever Joy Enterprise reviewing itsperformance in Manchester region to determine its feasibility by using the break-event pointformula and which present the profits and BEP at which enterprises in the position of no profitand no loss. This report also gives suitable advice to Ever Joy Enterprises on utilizing thebudgets as planning and problem-solving tools which solve the financial problems of theenterprises. Task 1Management Accounting systemsManagement Accounting is the accounting branch which basically deals with providing andpresenting accounting information to the manager in such an organized manner so that it can doits managerial functions of planning, controlling and decision- making in an efficient andeffective manner. Management accounting acts as a decision-making support system to themanager of an enterprises (Kaplan and Atkinson, 2015).As per Certified Institute of Management Accountants (CIMA), United Kingdom,“Management Accounting is an essential part of the company’s management concerned withclassifying, offering, and understanding information which is utilized for framing planning,strategy and monitoring and governing activities or events, decision- making, optimal usage ofresources of an enterprise, disclosure to stakeholders and other external to the enterprises,disclosure to workers or employees and assets safeguarding.Objectives of Management Accounting3

The main objective of management accounting is to offer important information to themanagement for an efficient and effective execution of managerial functions. Variousobjectives of management accounting are enumerated as follows:1. Planning and policy- making: Management Accounting provides or offers important andaccurate information to the management in the process of its policy- making and planning toattain goals and objectives.2. Controlling: Management: Accounting applies various essential techniques or methodssuch as Budgetary control, Management Audit, Standard Costing, and ResponsibilityAccounting to ensure an effective management control over the resources use of the enterprise.3. Communicating: Appropriate communication of the performance of many departments ofan enterprise to different administration levels is necessary required for planning, decision-making and controlling.4. Analysis and interpretation of financial statements: Management Accounting gathers,analyses and understands the important data from the results shown by the cost and financialaccounting system, and also offers important and appropriate information to the management ina useful and systematic manner.5. Decision- making: Management accounting offers important and accurate information to themanagement in the process of its decision- making. The growth and success of managementhighly and mostly depends upon a perfect decision- making.6. Tax planning: Management accounting assists to the management in the process of taxplanning by availing various tax rebates and reliefs and, thus, minimizes the tax burden of theenterprise on the whole.Role and functions of Management AccountingManagement accounting plays very critical role in managing the operations of thebusiness. As specified management accounting is the key in any organisation which have the4

records of every function of the organisation. The roles and the functions of the managementaccounting are discussed below:Forecasting and planning: One of the most important function that the managementaccounting play is to provide the necessary information and data for the decision makingin the organisation. The management accountants uses the techniques and the statistics,so as to use the data collected for the planning the business objectives.Organizing: This helps the management accountant in organising the resources availablewithin the organisation. They organise the accounting and the finance functions of thebusiness on the trends that are followed in the modern marketCoordinating: The management accountant uses this function to enhance the efficiencyof the organisation and to maximise the profits by making coordination among theemployees. It helps the management by reconciling the cost and finance accounts and bypreparing the budgets and setting the targets.Financial analysis and interpretation: The function of the management accountant is toprovide the data and make this available to the management along with the commentsand suggestions. This will help the managers to take the decisions and make the policiesaccordingly.a. Differences between Management Accounting and Financial AccountingPoints of DifferenceFinancial AccountingManagement AccountingObjectiveObjective is to account for theday-to-dayfinancialtransactions, and determinethe financial health of anenterprises (Maynard, 2017).Main objective is to report tothe management informationso that they can take properdecisions (Weygandt, et. al.,2015).PurposeBeneficial both for internallyas well as stakeholders toassessthefinancialperformance of the company.Beneficial mostly for internalmanagement for makingdecisions, for instance,budget, or spending plan etc. 5

FrequencyGenerally, it is prepared asper statutory requirements:yearly statement, quarterlyand half-yearly.Mostly prepared as permanagement requirements.No fixed interval at whichthe management accountsshould be prepared. Compliance Statutorycompliancerequired.Statutory not required.FocusFinancial reports are preparedon the basis of historicalinformation and reports areprepared for a fixed period oftime.Managementaccountingfocuses mainly on presentdata and forecasting futurereports.Users External and internal partiesOnly internal managementAuditing and PublishingCompulsory to be publishedand audited by statutoryauditors.Neither published noraudited by statutory auditors.ScopeThe scope of financialaccounting is narrow.The scope of managementaccounting is broad.b. Cost accounting systems (Direct Costs and Standard Costing)The cost accounting systems can assist the company in so many ways. It provides an exactproduct cost, delivers valuable operational and financial information, and also evaluates theperformance. The cost accounting includes measuring, recording, and reporting of productcosts. This system assists to the Ever Joy Enterprises to estimate the cost of their products forprofitability analysis, valuation of inventory, and control the cost.The Ever Joy Enterprises canutilize this framework to assess the productivity in the procedures and this framework likewisehelps in making the upgrades in the up and coming procedures of the enterprises. It willlikewise help the enterprises in value obsession of the item and limits the wastages in the6

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