(Solution) Management Accounting Assignment PDF

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
SCENARIO 1...................................................................................................................................1
a. Difference between Management and Financial accounting...................................................1
b. Cost accounting systems.........................................................................................................3
c. Different methods of management accounting reporting........................................................4
d. Evaluation of management accounting system along with integration of management
accounting system and reporting system in the organisation......................................................5
SCENARIO 2...................................................................................................................................7
1.Calculation of the cost and preparation of the income statement by using the marginal and
the absorption costing method....................................................................................................7
SCENARIO 3...................................................................................................................................9
1. Explaining the advantages and disadvantages of several planning tools of the budgetary
control.........................................................................................................................................9
2. Analysing the uses and application of the planning tools for framing and forecasting the
budget........................................................................................................................................13
SCENARIO 4.................................................................................................................................13
1. Cost, Volume, Profit analysis................................................................................................13
2. Performance indicators to solve financial problems in organisation....................................14
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Management accounting is the process of framing the reports of the management and the
accounts that facilitate accurate statistical and financial data timely. It is also called as
the cost accounting. It helps in analysing the cost of operations and the business for
preparing the financial reports internally, records and helps managers in making
effective decisions for achievement of the organizational goals.
In relation to short term decision making such reports play a vital role
and helps in gaining competitive edge over others. In the recent
times, every organization prepares both financial and management
accounting reports which increases their efficiency of work. Many
organisations started adopting management accounting system, and
management accounting reporting which increased working
efficiency as well as reduced burden of the company. The report
consists of details about definition of management accounting and
how it differs from financial accounting. It describes various
management accounting systems that are used by companies and
various reporting system which saves time and cost of company. It
shows how these both systems are integrated in the company named
Excite Entertainment limited that deals in leisure and the
entertainment industry in UK. It consists of absorption and
marginal costing method with the solution and comparison of
various planning tools used by company in making budget. It
contains analysis of volume, cost and profit and shows different
performance indicators that can help in solving financial problems.
SCENARIO 1
Section-A
a. Difference between Management and Financial accounting
Management accounting:

The management accounting aims at assisting the management of an
organization with both qualitative and quantitative information to manager in decision
making process in order to maximize the profits.
Financial accounting:
Financial accounting is process of classifying, recording, summarizing the
monetary transactions of an organization. It is used by the entities to keep a track of the
financial transactions of the organizations.
Particular Management accounting Financial Accounting
Definition This branch of the accounting
is related with providing
relevant information to the
mangers to assist them in
decision making process
related with formulation of
policies, plans and strategies to
run the business (Otley, 2016).
This branch of accounting
system is dedicated towards
preparation of the financial
statement of a business to
evaluate the financial
performance of the
organization and present the
same information to the
stakeholders.
Provision of
following the
accounting system
This is not a compulsory
system of accounting that an
organisation is required to
follow. Its adaptation in
business is voluntary.
To prepare the financial
accounts and statements is
compulsory for all the business
organisation. No business can
avoid the adoption of financial
accounting in the course of its
business operations.
Time frame of
preparation of the
reports
The reports under this system
are prepared as when needed.
The report generation is on the
requirement of the
organisation.
The financial reports are
prepared on the fixed time
basis (Theriou, 2015). This
means the reports are prepared
at the end of each accounting
year containing all the

information related with
monetary transactions of the
business.
Formate of the
reports
The reports prepared are
presented in the summarized
from which depicts the
financial position of the firm.
The reports prepared under
this accounting branch are
complete and detailed which
containing all the information
related about various aspects
of the business.
Data publication
and auditing
The reports are presented to
the internal stakeholders
including the investors,
shareholders, directors and
other members of the business.
In order to assist them in
making an informed
investment decision over the
business.
The financial statements
prepared including profit and
loss account, balance sheet,
statement of cash flows and
shareholder's equity are
published and presented to the
members including both
internal and external
stakeholders. This reports are
also audited by statutory
stakeholder on yearly basis for
each financial year.
Following the
accounting
standards
There is no particular specified
format for making the reports
and no statutory legal
requirement is there to prepare
them.
The financial accounting
statement must be made with
abidance with IFRS,
accounting standers, GAAP
and rules of book keeping (Li
and Yang, 2015).
Assumptions For preparing the report under
this accounting no assumptions
are there it is purely on the
This accounting is based on
various assumptions,
principles and conventions. All

discretions of the company as
in which manner it wants to
execute a report.
the financial reports are
prepared on the basis of the
guidelines provided by the
relevant statute law.
b. Cost accounting systems-
Cost accounting is one of the branch of accounting, which measures, records and reports
information regarding the cost of the business. The foremost objective of the cost
accounting is ascertainment of the cost and using it in making decision and evaluation of
the performance.
Direct costs:
Direct cost can be defined as a cost with an objective that can be completely
attributed to the production of specific goods and services. The direct cost of Excite
Entertainment Ltd includes those expenses which can be imposed directly to the
particular department, section, job or batch under the organization. The cost is directly
linked to the specific location where it is actually incurred. The direct cost can be fixed
or variable. Its nature is not fixed nor variable. Generally, the direct cost in Excite
Entertainment Ltd is determined for the production to identify the actual cost producing
the finished good (Andersen, 2018). Due to its nature of directly tracing to a particular
predict or department, there is no requirement of allocation this cost to a product or
department or other cost objective. The direct cost of Excite Entertainment Ltd is related
with labour, material fuel, power consumption, commission, piece rate wages and
manufacturing supplies. Direct cost is assist in determining the final sales price of
product as it allocate direct expended incurred on a product.
Standard costing:
Standard costing for Excite Entertainment Ltd can be defined as that system
which is used by the manufactures to identify the difference or the variance between the
actual cost incurred on production of goods and services and the cost which should
actually be incurred as per the budgets or pre determined figures. The actual cost which
should have occurred is termed as standard cost which is integrated with the master
budget and profit plans (McVay, Kennedy and Fullerton, 2016). The actual cost is