Management Accounting Systems and Reports in Excite Entertainment Ltd

This article discusses the management accounting systems and reports used in Excite Entertainment Ltd, including inventory management, cost accounting, job costing, and various managerial accounting reports. It also evaluates the integration of these systems within the company's operational processes.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...............................................................................................................3
TASK 1 ..............................................................................................................................3
Section (A)......................................................................................................................3
Section (B)......................................................................................................................5
TASK 2...............................................................................................................................8
TASK 3.............................................................................................................................10
Section (A) ...................................................................................................................10
TASK 4.............................................................................................................................12
Section (B)....................................................................................................................12
Calculations:....................................................................................................................13
CONCLUSION.................................................................................................................14
REFERENCES................................................................................................................15

INTRODUCTION
The management accounting is a systematic accounting approach which is
assigned in process of gathering financial and non financial data of business entities in
order to prepare internal reports (O’Grady, Morlidge and Rouse, 2016). These reports
are widely used by different kinds of department of business entities for better
management of various kind of activities and operations. The basic aim of project report
is to demonstrate understanding about detailed concept of MA. The project report is
based on Excite entertainment limited company which operates in entertainment sector.
The company is located in United Kingdom. The project report covers about different
kinds of management accounting systems (MAS), MA reports and budgets. Along with
role of various kind of MAS is demonstrated under the project report in detailed manner.
TASK 1
Section (A)
(a) Comparison between MA and financial accounting:
Basis MA Financial accounting
Data gathered In this accounting both kinds of
data is gathered by accountants
including monetary and non
monetary.
On the other hand, in this
accounting only monetary data is
gathered.
Outcome This accounting is being applied by
business entities in order to
produce internal reports that help to
managers.
While this accounting is applied
by companies for preparation of
financial statements.
Presentation of
reports
Under this accounting internal
reports are presented only to the
internal stakeholders.
On the other hand, under this
accounting financial statements
are presented both to internal
and external stakeholders.

(b) Cost accounting system-It is an accounting system that is associated with keeping a
detailed record of incurred cost in different operations. With the use of it companies can
aware about actual financial position, this is so because under it actual cost is
compared with estimated cost. Basically, this accounting system is essential for finance
department of companies because with the use of it they prepare the financial plan as
well as allocate the financial resources into activities. Under this accounting system
below mentioned costs are included that are as followings:
 Direct cost- Direct costs are costs that are accountable specifically to a cost
entity. Several overhead costs that can be solely attributed to a project could also
be categorized as direct costs (Ahrens and Khalifa, 2015).
 Indirect cost- Indirect costs are costs that can not be accounted for directly by a
cost item. Indirect costs may vary or be solved. Indirect costs involve costs
related to regime, personnel and safety.
Such as in the context of selected company, Excite entertainment limited their financial
team use this accounting system that help them in keeping cost minimum. As well as in
proper allocation of available funds into different kind of activities of production.
(c) Inventory management system- In this accounting system of MA, the inventory of
companies is managed in an effective manner. Along with it traces the cost which
occurs in process of storing goods in warehouses and stores. The key objective of this
system is to create balance between the demand and supply of goods of companies.
Along with it is essential for organisations for providing time to time report about stored
material in the warehouses so that they can take decisions about acquiring new material
as well as production. Herein, the aspect of above Excite entertainment limited, they
implement this accounting system. Due to this accounting system they get able to track
the record of material of organising the events such as music system, display system
etc. As well as their department take decision for purchasing newer equipments as per
the available quantity in the warehouses.
(d) Job costing system- It has been defined as a type of accounting system that is
related to the allocating the production cost of a particular unit of output (Burritt and

Christ, 2017). Basically, this accounting system is crucial for those companies in which
portfolio of products is larger and their cost is different from each other. So it is essential
for ascertain of cost, loss, profits of each job. Herein, the context of above Excite
entertainment limited company they use it because their portfolio of equipments is vital.
This helps them in effective evaluation of each activity's cost. As well as their managers
assess the cost of each individual activity in process of organising any kinds of events
at global or local level.
(e) Advantages of management accounting systems and their application for context of
companies.
Name of management
accounting system
Benefits
Inventory management
system
As per above description of this accounting system that it is
linked with the management of materials by tracking
quantity. In the above entertainment company, Excite
entertainment limited their managers implement this
accounting system with an objective of keeping balance of
purchasing of new equipments of organising events.
Cost accounting system It is related to the tracking and minimising the cost of
different kind of activities. Such as in the above Excite
entertainment limited company, they use this accounting
system in keeping the cost of organising any kinds of event
Job costing system This is aligned with the evaluation of each job 's efficiency
in terms of cost, profit as well as loss. In the above selected
Excite entertainment limited company, they analyse each
job linked in different tasks of organising any event.
Section (B)
(a) Different types of managerial accounting reports:

MA reports- The term MA reports can be defined as a kind of report that consists a vital
range of information regards to monetary and non monetary aspects of business entities
in a systematic manner. The purpose of these reports is to helping management
department of business entities in order to take corrective steps for various internal
aspects. The above Excite entertainment limited company is preparing different kinds of
reports that are as followings:
 Budget report- This can be defined as a type of report that is prepared by
accountants in order to manage financial performance in an effective manner
(Arnaboldi, Busco, and Cuganesan, 2017). The report contains detailed
information about estimated and actual monetary outcomes for a specific time
period. The purpose of preparation of this report is to helping managers by
providing information regards to variation in actual and projected data. In the
above chosen Excite entertainment limited company, their managers are utilising
key information by help of this report regards to difference in financial outcome of
different business activities.
 Accounts receivable ageing report- The report consists detailed information
about different kinds of debt amount hold by debtors by whom business entities
make financial transaction on credit. Basically, the main purpose of preparation
of this report is to helping finance department about total collective amount from
debtors and customers. On the basis of it, business entities make futuristic plans
and strategies in order to determining need of funds. Such as the Excite
entertainment limited company, is producing this report in order to provide data to
finance department regards to debt amount hold by their clients after organising
event on credit.
 Performance report- The main concept of this report is much more similar as
budget report. Under this report information about each individual employees'
performance is included along with each activities progress is also evaluated.
The main purpose of preparation of this report is helping managers of business
entities so that they can take corrective steps in order to promote any employees.
As well as this report is also beneficial for companies to removal of conflicts
regards to promotion and growth of employees. This is so because under it,

employees are promoted on the basis of their actual performance. Such as in the
aspect of above Excite entertainment limited company, their manager are using
this report for promoting their employees on the basis of their actual
performance.
 Stock report- This report is being prepared by accountants by aligning inventory
management system (Hopper and Wickramasinghe, 2015). In this report,
information regards to all types of stock is included. In broad manner this report
includes statistical data about quantity of raw material, finished goods etc. Under
it, information is included only after proper valuation using various kinds of
techniques. The above, Excite entertainment limited company is using this report
to help their store manager in order to evaluate how much quantity of equipments
are stored in their warehouses for organising any types of events.
(b) Explanation about why information presented should be accurate, relevant to the
user, reliable up to date and timely.
This is important for business entities to keep the information accurate and
relevant because of following reasons:
 Accurate- The accounting information should be accurate without containing any
error. It is so because if accounting information will be correct then it will be
easier to management department to take right actions in order to formulate
strategies.
 Updated- Another feature of accounting information is that these should be
updated on a regular basis so that accountants can become aware about
changes in monetary aspects.
 Timely- As well as another importance of good accounting information is that the
presentation of reports should be on time (Ofileanu, 2015). This is so because if
information will not be published on time then it can be difficult for managers to
prepare further plans on right time.

(c) Critically evaluation of way in which management accounting systems and
management accounting reporting should be integrated within Excite Entertainment Ltd
Operational processes.
In the current business scenario, it is essential to interrelate different
departments with each other so that higher success can be achieved. Such as in the
Excite Entertainment Ltd company, their finance department is linked with cost
accounting system so that they can take maximum use of available resources (Hoque,
2018). As well as job order costing department is also aligned with this department.
Apart from it, the MA reports are also linked with departments such as performance
report is integrated to management department so that they can take decision about
progress and performance of their employees. Thus, as per the above description this
can be stated that MAS and MA reports are linked to process of Excite Entertainment
Ltd company.
TASK 2
Costing techniques to produce income statements:
There are vital range of accounting techniques in order to prepare income
statements. This depends on business entities' accountants that which method can be
suitable for them. Such as in the aspect of above chosen business their accountants are
using different kinds of methods that are as followings :
Absorption costing- This can be defined as a type of technique in that both occurred
costs are considered in a similar manner (Chiapello, 2017). In other words, under it
fixed and non fixed costs are taken as cost of unit.
Marginal costing- It is a type of technique in that both types of costs are taken in
different manner. Such as fixed cost is taken as cost of period while variable cost is
taken as product cost.
Income statement as per absorption costing:
Particulars Amount
Sales (8000*5) 120000
Less : Cost of good sold:

Opening stock (500*10)
Production (10000*10)
5000
100000
Less- Closing stock (2500*10) 25000
Absorption cost 80000
Profit 40000
Income statement as per marginal costing:
Particulars Amount
Sales (8000*15) 120000
Less: Variable cost
Opening stock (500*6)
Marginal cost of production (10000*6)
3000
60000
Less: Closing stock 15000
Marginal cost of sales 48000
Contribution 72000
Fixed cost 40000
Profit 32000
Interpretation – On the basis of above produced income statements as per the given
data, this can be find out that under absorption costing net profit is of 40000. While in
the marginal costing method, value of net profit is of 32000. Though, amount of data is
used in preparation of income statements is similar. The reason of variation is the
consideration of cost in different manner. Such as in the absorption costing method,
fixed cost and non fixed costs are considered as unit cost. On the other hand, in
marginal costing method fixed cost is taken cost of period and variable cost as cost of
unit. Thus, this is the main for which value of net profit is different even using similar
data. Apart from the consideration of cost, rest of things are done similar in both costing

methods. Like value of sales is similar under absorption and marginal costing that is of
120000.
Advise to management:
On the basis of produced results by help of absorption and marginal costing, this
can be find out that both techniques are producing different results and analysis of
these techniques is done below:
Absorption costing:
Advantage-
 This technique is beneficial for business entities in order to track the profits in
more effective manner.
 As well as under this costing all kinds of costs are considered as unit cost that
makes enable the consumption of total cost.
Disadvantage-
 One of the key disadvantage of this technique is that it does not help in
enhancement of operational efficiency.
 As well as this is not beneficial for making comparison of product lines.
Marginal costing:
Advantage-
 This costing technique is useful for business entities in order to dividing cost in a
separate manner (Seal and Mattimoe, 2016).
 As well as this costing has the nature of remaining same irrespective of volume
of production.
Disadvantage-
 The key drawback of this costing technique is that it ignores time element.
 As well as it is difficult to analyse the overhead in an effective manner.
So, as per the above analysis this can be analysed that above absorption costing
technique seem better to use. This is so because under it both costs are taken in a
similar manner.

TASK 3
Section (A)
Different types of planning tools of budgetary control.
Budgetary control- This can be defined as a kind of performance management
technique in that goals are set by managers by help of different kinds of budgets. The
main objective of this approach is that keeping an extra sight of eye over various types
of financing activities. Such as in the context of above Excite Entertainment Ltd
company, they are using different kinds of planning tools of budgetary control and some
of them are demonstrated below in such manner:
 Cash budget – This is a kinds of budget that consists detailed information
regards to activities of cash which cause as in and outflow of cash (Jacobs,
2016). The objective of preparation of this budget is to helping finance
department in order to assess key information about in and out flow of cash. In
the aspect of above chosen Excite Entertainment Ltd company, their managers
are using key information by help of this budget about allocation of cash.
Advantages- One of they benefit of this budget is that this is suitable for companies in
order to manage the performance regards to cash management.
Disadvantage- This budget is not suitable for those business entities in which
transactions of cash is done at a large parameter.
 Zero based budget- This is a type of budget that is prepared in a completely
different manner in which financing activities are projected on the basis of proper
research. The objective of this budget is that to provide accuracy in financial
activities of business activities. In the absence of this budget, it can be difficult to
business entities to manage over all performance of various aspects. In the
context of above Excite Entertainment Ltd company, their managers are using
this budget in order to control overall expenditure in an effective manner. It has
some advantages and disadvantages that are as followings:
Advantages- This budget is suitable for business entities in order to provide accuracy
and consistency in financial activities.

Disadvantage- One of the key drawback of this budget is that it is not affordable for all
kinds of business entities. Specially for small businesses who can not afford cost of
preparation of this budget.
 Sales budget- It is a type of budget that is prepared by accountants in order to
trace activities of sales units in an effective manner (Lobianco, Caurla and
Barkaoui, 2016). The budget consists information regarding to quantity of
possible units that can be sold out during a particular time period. In addition, this
budget consists information about total possible amount of revenues that can be
generated by selling of vital range of outputs. In the aspect of Excite
Entertainment Ltd company, they prepare this budget in order to estimate
number of events that can be performed by them. This has some advantages
and disadvantages that are as followings:
Advantages- This budget is beneficial for companies in order to track the progress
regards to total units of outputs that can be sold out.
Disadvantage- It is not beneficial for companies in the case when any financial crises
occurs inside of business.
Role of planning tools in order to sort out the issues.
In the aspect of overcoming from financial issues, different kinds of budgets play
a significant role ( Chandler, 2017). This is so because budgets consists information
about all possible monetary transactions. On the basis of it, this becomes easier for
finance managers to keep an extra sight of eye over monetary transactions. Such as in
the aspect of above Excite Entertainment Ltd company, they are using different kinds of
budgets such as ZBB, cash budget etc. in order to overcome the issue of
mismanagement of total expenditures.
TASK 4
Section (B)
Comparison of ways in which MAS is used to sort out the issues.

Monetary issue - It can be characterized as a problem because businesses do not have
sufficient funds for execute various types of activities. In the aspect of business entities,
there are vital range of financial issues that are demonstrated below in such manner :
 Higher expenses- This is a kind of financial problem in which the profits of
businesses decreases by a huge gap as time goes by while spending increases
significantly (Schmidt, Götze and Sygulla, 2015). Because of this, companies are
dealing with the problem of lack of financial resources. Such as in the aspect of
above Excite Entertainment Ltd company chosen business entity they are facing
this monetary issue.
 Lack of sales revenues - It is an economic issue in which the transaction value of
sales of corporations begins to decline. As a result, companies total amount of
funds start to decrease and they are beaten by competitors.
Identifying monetary issue:
 Benchmarking- It is a method in which the financial dimensions of firms are
compared with competitive business organizations in order to find a real problem
(Farrell and Gallagher, 2015). This method is being used by administrators in the
above-mentioned organization to find actual monetary problem.
 KPI - This is a way to manage monetary and anti-financial output. Under it, all
activities that generate more revenue and expenditures relative to projected
goals are outlined.
 Budgetary targets- Comparing actual income & expenditure with estimated
objectives is done within this technique so that errors can be found.
Financial governance- It can be characterized as a structured method of efficiently
collecting analysing and handling financial information in order to manage financial
issues (Gray and Alles, 2015).
It could be used as a way to avoid money issues as it comprises of all a
corporate entity's financial documents and on the basis of which companies can find
alternatives to work out the issues. Such for financial management, due to additional
information on all economic factors, it serves as a control tool for businesses.

Comparison of companies:
Basis Excite Entertainment Ltd KEF limited
Financial issue The company faces the issue of
high spending numbers. As a
consequence, the overall revenue
drop and their rivals can not
match. In addition, they are not
able to stand under competitive
environment.
The organization is facing the
loss of revenue from sales.
Because of this problem, the
current amount of funds is
decreasing as well as they are
unable to spend funds
throughout the rest of
operations.
MAS They use the "cost accounting
system." That's because this
accounting system systematically
manages all monetary resources
and tracks each activity's
performance. Because of this,
expenses can be kept lower and
their economic issue is resolved
out.
The corporation's executives
use "Price management
method." That is because they
are reviewing their prices of
products according to needs of
consumers with the help of this.
It raises their revenue units as
well as the problem has also
been worked out.
Calculations:
BEP to attain desired profit = Fixed cost + desired profit / contribution per unit
= 120000+90000
= 210000/30
= 7000 units
Profit of sale of 7000 units
Sales (7000*40) = 280000

- Variable cost = 70000
Contribution = 210000
- Fixed cost = 120000
Profit = 90000
Analysis- On the basis of above calculated part as per the given brief, it can be stated
that company can attain desired profit of £90000 by selling of 7000 units. On the other
hand, if they sell any number of units in order to gain targeted revenue then they can
not achieve it (Mahmoudi Jodeiri and Fatehifar, 2017). This is so because selling of
units less then 7000 may leads to lower profit. While selling of units less then 7000 units
can become cause of higher amount of costs. So overall, management department of
above business entity should focus on selling of 7000 units.
CONCLUSION
On the basis of above stated project report it has been articulated that term MA is
very critical to use by business entities in order to proper management of both monetary
& non monetary aspects. In the project report vital range of accounting systems etc. are
concluded such as cost accounting system, stock management system. In addition, MA
reports are also included under the report that are accounts receivable ageing report,
stock report etc. Along with in further part of report, different types of budgets like ZBB,
cash budget are concluded with description of their role in process of sorting issues. In
the part of project report importance of different kinds of MAS is mentioned in order to
sort out issues.

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