Management Accounting Report: Financial & Cost Analysis for Ever Joy

This report provides a comprehensive analysis of management accounting principles and their application within Ever Joy Enterprises. It begins by differentiating between management and financial accounting, highlighting the distinct objectives and users of each. The report then delves into cost accounting systems, inventory management, and job costing systems, explaining their functions and importance. It also discusses different types of management accounting reports, such as budgeted reports and account receivable aging reports, and their roles in decision-making. The report further includes a break-even analysis, evaluating the number of tickets to be sold to reach break-even and profit targets. Finally, it examines planning tools for budgetary control and the significance of financial governance in preventing financial problems within the company, offering valuable insights for effective financial management.

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
A. Stating difference among management and financial accounting..........................................3
B. Cost accounting systems.........................................................................................................4
C. Inventory Management systems.............................................................................................5
D. Job costings system................................................................................................................6
E. Stating different types of management accounting reports....................................................7
F. Requirement of sound accounting system and importance of departments for generating
timely, accurate and relevant information...................................................................................8
TASK 2............................................................................................................................................9
a. The number of tickets that must be sold to break even.........................................................10
b. If company want to make a profit of £30,000.00, how many tickets should be sold?..........10
c. What profit would result if 8,000 tickets were sold?............................................................10
TASK 3..........................................................................................................................................10
A. Evaluating planning and problem solving tool for dealing with financial problems...........10
B. Evaluating financial governance for pre-empt or to prevent financial problems.................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Management accounting plays a significant role in the growth of an business enterprises.
Management accounting is essential for a company for the efficient operations of its business
enterprises. Management accounting traces and reports both non financial and financial
information of organization where financial accounting only keep record of financial information
of organization. The present report will help in understanding the importance of management
accounting and management accounting system in Ever Joy enterprises. The present report will
discuss about the differences between management and financial accounting. Further, the report
will help in understanding the cost accounting system, inventory management system, job
costing system of management accounting. The report will also discuss the various types of
management accounting reports. Furthermore, the report will help in understanding the need of
sound accounting system in Ever joy enterprises. Moreover, the report will also include the
calculation on the break even analysis. Further, the report will include the planning tools for the
budgetary control. At last , the report will helps in understanding financial governance and its
important in preventing financial problem in Ever Joy Enterprise.
TASK 1
A. Stating difference among management and financial accounting
Accounting is referred as process of classifying, summarizing and recording in monetary
aspect, the events and business transactions along with appropriate interpretation of the outcome.
The Ever joy Enterprises use accounting for keeping proper track of specific financial
transactions. Accounting has two branches which are management and financial accounting
where true and fair aspect of financial position had been viewed of Ever joy Enterprises to other
parties (Renz, 2016). However, the objective of management accounting is to give quantitative
and qualitative information to its managers so it will help for assisting in decision making and to
increase profit.
Management accounting traces and reports both non financial and financial information
of organization where financial accounting only keep record of financial information of
organization. The management accounting users are only internal management and users of
financial management are external and internal parties as well. The information about

management accounting is very confidential and for application of business entity only where
financial accounting is reported publicly.
The financial accounting only includes monetary information as it is performed in
prescribed format where management accounting has both non monetary and monetary
information like quantity of used raw materials, worker's number and it has prescribed format as
well. Financial accounting lays special emphasis on giving information on basis of business
entity's function to its users and performed in specific duration, generally it is 1 year. On the
contrary, management accounting focus on giving information for purpose of evaluating
performance and for devising plans in the future and it is done according to requirements of
management like regularly, weekly, monthly, quarterly, half yearly etc.
Financial accounting is necessity for Ever joy Enterprises for purpose of auditing and it is
required to be published and directly audited through statutory auditors. However, management
accounting is voluntary without need of editing and it is for internal use so it is not mandatory to
be audited and published (Kaplan and Atkinson, 2015). The both types of accounting helps Ever
joy enterprises in different aspect as financial accounting helps for appropriate record keeping of
various transactions along with comparison among performance of two period or entities. On the
contrary, management accounting helps for analysing performance to frame strategy for effective
preparation and judgement of policies of the future. Financial accounting is prepared with
standards of IFRS and GAAP and is verifiable as management accounting does not follow any
rule and could not be predictive and verifiable on immediate aspect.
B. Cost accounting systems
A cost accounting system is used through manufacturers for tracing activities of
production with application of perpetual inventory system. In simple words, this system of
accounting has been framed for particular manufacturers and records inventory flow on continual
aspect through different production stages and slowly it is transformed in finished goods in
reality. In case raw materials are used in production then system will directly record application
of materials through crediting account of raw materials and debit goods in process account.
There are various products which will pass through various stages prior they could be replicated
as finished goods as it often various accounts for work in process.

 Direct cost: It is traceable for specific item like product. For instance, material cost in
Ever joy Enterprise is used for purpose of creating a finished product is replicated as
direct cost. There is presence of few direct cost as consumable supply's cost is used for
manufacturing product as it could be considered as direct cost. On the contrary, labour of
production is on frequent aspect as it is not direct cost due to employees which are not
sent and there is few producing items which are less incremental rather paid for duration
of work shifts along with production's volume.
The analysis of direct cost is used for department's production of Ever joy
Enterprise where direct cost of goods sold are subtracted for individual consumers
through revenue generated where amount of yield to consumers which are contributing
with context of coverage of company of overhead profits and cost. On basis of
information, management might took decision where consumers are not getting profit and
it is dropped downwards.
 Standard cost: It is referred as practice of eliminating expected cost with context of
actual cost on basis of accounting records and periodically variances are traced by
reflecting difference among actual and standard costs. It has engagement of creating
estimated costs for each activities in Ever joy Enterprise.
C. Inventory Management systems
It is a system of management accounting that helps in tracking the flow of goods in a
company. It tracks the product throughout its supply chain in an organisation. The system helps
in covering everything from its manufacturing to the retailers, warehousing, shipping distribution
and until final delivery to the client. It helps the business in evaluating the movement of the
goods from every part of goods that helps in making decisions regarding investment in the
company (Azudin and Mansor, 2018). The function of the inventory management is to keep the
detail record of new product and the products that are being returned from the retail or
warehouses.
The inventory management system is important for the organisation as it helps in
determine the need for manufacturing the new products and keeps recording of the over stock
and under-stock of inventory in a particular areas. The inventory management system is vital as
the inventory of an organisation is considered as the asset of a company, as it holds the

investment. The inventory accounting system helps in knowing the current status and flow of
inventory. The are different methods of evaluating the inventory management. One of them are:
FIFO: it is an inventory management system in which the stock that are manufactured first will
be taken out for sell first. All the inventory in the warehouse or retail will be sold only after that
the goods that are being recently produced will be shipped or taken out for the sell (First in first
out inventory control – FIFO , 2018). This method helps in ensuring that the oldest stock will be
used first as it holds the investment of the company. It is because of the risk occurs due to the
fluctuation in the economy and the risk of rising of falling in the price of the products in the
market.
LIFO: This method of inventory states the latest manufactured goods will be taken out from the
warehouse to offers for sale. The method used the current price in order to evaluate the cost of
good sold of a product. It is a method of the inventory valuation in which the last inventory
manufactured will be taken out to be sold first (Booth, 2018). It has a disadvantage, that the
stock which were manufactured before will be taken out first, and may be remained unsold. It
will cost to the company as the investment on that inventory will go waste. The company uses
this method hole assuming that the price of the products will go high with the time.
Average method: This inventory management helps in calculating the cost of ending inventory
with the cost of good sold for a period on the basis of the weighted average cost per unit of
inventory. In it is a way of accounting in which the actual prices paid for each unit, even the
closes prices will fluctuate.
D. Job costings system
It is a method in which cost of the manufacturing are being assigned to each individual
product or the stock of the product. This system helps in monitoring the manufacturing cost that
are being assign to each products. It helps the manager to enables in tracking the cost of the
expenses. It helps the company in determining the manufacturing cost by diving therm on
overhead, dire cost labour, direct material cost which helps the company in estimating the actual
value of them (What is Job costing? , 2018). It helps the company in controlling their expenses
of raw material, labour working hour and machinery cost by assigning cost to each individual
item of customer order separately. Job costing system is an effecting tool when the product
manufactures in the company are not identical.

E. Stating different types of management accounting reports
This are the accounting reports which help in preparing providing the financial and other
business operations reports to the higher authority of management. This reports helps the
management in order to evaluate and determine the need to [re[are and take decisions regarding
the growth of the financial and overall performance of the ever joy enterprises. This management
reports includes the statistical data and financial data are essential for the management to make
the decisions and strategies to enhance the future performance of the company in order to
achieve the organisational goals and lead the business to the sustainable success (Schaltegger and
Burritt, 2017). Following are the different types of management accounting reports:
Budgeted report: this are perhaps the most important managerial report in a company. This
report helps the management of the company to evaluate and analyse three the performance of
the business operations as according the budgeted prepared. The budget report helps in
estimating the difference between the actual performance and the budgeted performance of the
enterprise.
Account receivable ageing report: This report are prepared in a company which are providing
heavy credit facilities to its client and distributors. This reports help the manager to identify the
current defaulter and the issues in the company's collection process. In order to run the business
operations smoothly , it is important for the company to face a strong credit collection process
(Azudin and Mansor, 2018). If there are many defaulters in the company , the company's will
face the problem of sufficient cash flow, that are bong required for day to day operations as well
in the time of emergency contingency.
Balance sheet: It is the statement of the financial position which helps in estimating the
company's total assets as well as the total liability of the company. It is the most important report
which helps in ascertaining the financial position to not to the management of the company but
also to the outside users like shareholders, investors, government, etc. The balance sheet will
help in determine the financial performance of the company as compared to the previous
accounting year (Booth, 2018). this will help the management in taking measurable action in
order to take appropriate financial decisions in order to attract more investors.

Cash flow statements: this reports helps the management to evaluate the amount of money that
can be expected to come in short-term and medium term accounting period. This reports helps in
making budgeted of the company and anticipate the amount that needs to be spended over a
certain period of time. This reports helps in providing the summary of the cash inflow and
outflow to the management in order to evaluate the shortfall and surplus of the funds in the
company. It is an useful report for the Ever Joy Enterprise, as this is more easy to evaluate the
cash flow than the long term report of cash flow statements (Singhvi and BODHANWALA,
2018). The short term cash flow statement is relevant and more useful.
F. Requirement of sound accounting system and importance of departments for generating
timely, accurate and relevant information
Having a sound a accounting system in an organisation is an important element for the
success of the organisation. Sound accounting system will help the management of Ever Joy
Enterprises to evaluate the current financial situation or position of the company. It would help
the management of the company to prepare the strategies and make decisions for the future
growth and development of the company (The Importance of Accurate Accounting in Business .
2018). Sound accounting system will help the company' manager and owner of having a
financial picture as how the business are carrying out their operations. It is essential for the
company to keep maintain an affective and sound financial system The importance of having a
good financial accounting system in a company are as follows:
 A sound accounting system will help the manger to know the status of cash flow in the
company. Which will help the company to know the amount needs to be pay and the
expected amount receivable of the company.
 The proper accounting system will help the company is making the efficient decisions
and strategies for increasing future business operations and activities on order to attain
the organisational goals (Ming, 2018).
 An accurate accounting system helps the company to show its investors and shareholder
the correct picture of the financial position of the company. It would help the company to
attract more and more investors towards their company,
Only having a good accounting system is not enough, the accounting report
should be relevant, accurate and the management of the company should get the report at the

time or before the decision making process. It is the duty of every department to properly report
about that business operations of a specific time period. Getting a report of the department will
help in making proper budget at the correct time, in order to allocate the cost so that the
department of the business can carry out their operations successfully (Liu and et.al., 2018).
Making an accurate report is important to make effective decision and strategies for the business
operations. If the accounting report for the department is not accurate, the manager will not be
able to make correct decisions for the operations.
TASK 2
BREAK EVEN POINT:
It can be defines as the point of sales of the company where, the revenue earned from the
sales is equal to the total cost of the production. It is the situation where the company is at no
profit and no loss situation. The break even analysis helps the manager of the company in
ascertaining about the revenue from the product and services in ability to collect the cost of the
production (Zhang and et.al., 2018). After the break even point meet, the company started to
earns the profit. Moreover, the BEP is an helpful tool for the manager to make an important
decisions like setting prices, controlling the cost of production etc.
Calculation of Break even point for Ever Joy Enterprises:
Particulars Figures (in £)
Variable cost 10 per unit
Fixed cost 60000
Selling price per unit 20
Contribution per unit 10
BEP (in unit) total fixed
cost/contribution per unit 6000
Break Even Point in monetary
term=BEP in unit*selling price 60000
Desired profit 30000
Total ticket needs to be sold (desired
profit/contribution+bep) 9000
Profit if 8000 ticket are sold
8000 = (60000 + DP) / 10
(8000 * 10) = (60000 + DP)
80000 – 60000 = £20000

INTERPRETATION:
As per considering the above calculation it can be interpreted that, break even point of the
ever joy contribution in terms of unit to 6000 tickets that needs to be sold. It can also be said that
the company will have to earn 60000 pounds in order to meet the break even point in terms of
monetary value (Hatch and et.al., 2017). It can also be seen from the above calculation that, in
order to earn the profit of 30000 pounds the firm has to sell 9000 tickets. It can be articulated
that, if the firms sells total 8000 ticket Ever Joy Enterprises will ,make a profit of 20000 ponds.
a. The number of tickets that must be sold to break even.
6000 tickets.
b. If company want to make a profit of £30,000.00, how many tickets should be sold?
9000 Tickets.
c. What profit would result if 8,000 tickets were sold?
20000 pounds.
TASK 3
A. Evaluating planning and problem solving tool for dealing with financial problems
The budgetary control is the process in which the actual performance of the
company is being compared to the budgeted performance. It is an important tool for the
company which helps in determining the variances between the actual performance and the
budgeted performance in order to take actions if required. It is an important tool which helped in
maintaining the financial position of the company by adopting different planning tool in order to
control the expenses of the company. The planning tool for budgetary control in Ever Joy
Enterprises are as follows:
Activity based budgeting:
it is the method of budgeting process which that helps in records, analyse and research
the activities that are more productive and contributed to the cost for the business. Activity based
budgeting helps in estimating the efficiency for the business operations and develop budgets
based on that activity(What is activity based budgeting? , 2018). It helps in evaluating the most
profitable activity or area for the company. The company than allocate the cost to activity that
are more profitable for the company. It helps the company to save its cost by eliminating the

waste activities from the business. The advantage and disadvantage of the activity based
budgeting are:
Advantages of the activity based budgeting are as follows:
 Activity based costing helps in reducing cost by giving meaningful information the
apportion available t reduce cost in different departments.
 It works only on the activities of the company. It helps the management in taking the
quality decisions by knowing the nature of each activity (Kaplan and Atkinson, 2015). The accurate cost information helps the management to adopt the productive
improvement measures.
Disadvantage of the activity cost budgeting:
 activity based costing can only be used in large size organisation as the activities in large
size are spread wide.
 The activity based budgeting can not be applied in the organisation where, there only one
products of few products are manufactured.
Zero based budgeting:
it is a method of budgeting in which every expenses are made for each new
period. This budget system starts with a zero base and each activity in the organisation is
analysed to prepare the plan and budget and need of cost for the year (Noreen, Brewer and
Garrison, 2014). In this the budget are made without considering the previous year budget.
Advantage of zero based budget:
 It facilitates the business in the allocation process of resources more efficiently, as it
considered the actual performance rather than past performance (Miller, 2018). It helps in analysing each activity of the business and its cash flow which helps in
computing their operational cost. It helps in cost reduction and give more accurate
budget.
Disadvantage of Zero based budget:

 As the process of this budget starts with zero, it will requires man power to analyse every
activity of the business .
 The zero based budgeting is a time consuming process as making a budget by estimating
each activity requires lot of time for management
These planning tools are very effective for the Ever Joy Enterprises in order to
respond its financial problems. The activity based budgeting helps in controlling the waste
activity that are not contributing as compared to others. It helps saving the cost of the company
that could be invested in the profitable activity and helps in responding to the financial problems
of the firm. The zero based budgeting helps the Ever joy enterprises to allocate the cost to the
departments on their actual performances (Miller, 2018). It facilitates the management in cost
reduction and give more accurate budgets, which helps in increasing the performance of the
company and hence in creating the financial position of the company stronger.
Problem solving tools which deals with financial problems are as follows-
Using benchmarking: with the use of benchmarking, Everjoy enterprise will analyse
financial statements of its competitors and will compare its result with that organisation to
increase efficiency and productivity through effective strategies. This is the term which refers to
process of comparing business performance and practises with same line of industry to increase
quality of time, and cost. This will essentially help in solving financial problems of organisation.
Its pros are as follows-
 With the use of benchmarking, Everyjoy enterprise will able to increase its performance
management by determining which are inefficient.
 Benchmarking also helps in developing creativity of work in organisation. To stay
competitive in accordance with current trend of market this is an effective method for
Everjoy organisation.
Its cons are-
 It does not measure effectiveness which affect completion of work of
organisation.
 It will sometimes foster mediocrity where there are a chance of bias which influence data
collected by organisation.
Using Key financial indicators: this are the indicators which helps in solving financial
problems of Everjoy organisation. Two indicators are used to solve financial problems that is

financial and non financial. With the financial indicators, organisation will able to increase its
ability for paying short-term debs which is with short-term assets. Ability of company will also
get increases to remain solvent by providing availability of day-to-day requirements of business.
With non financial indicators, company will able to manage its quality of services, with the help
of effective human resource management.
Its advantages are as follows-
 This method is the sole focus of attention to organisation. Therefore, with the use of this
indicators company will able to achieve both long term growth and short term goals.
 This method provides an accurate analysis of performance and profitability of company
by which effective decision in favour of business operations will get developed meet
objectives.
Its disadvantage are-
 There are different method which used in this method by which confusion get developed
regarding the area which needs improvement.
Using balance score card method: it is the method which helps to determine strategies
and goals of Everjoy enterprise. By considering true needs of business, this method will help in
developing strategies which solve issues and financial problems. It also enables company to
effectively align its structure which result in increase of performance and profitability.
Its advantages are as follows-
 By this method, company will able to analyse clear picture of its performance in business
market. It also measures performance of company for meeting its future goals.
 By this method, managers will able to monitor performance of employees and by that
action plan will get developed to achieve success of company.
Its disadvantage are -
 Its disadvantage is that it is very expensive and time consuming for its development in
organisation.
Comparison between Everjoy organisation and Cross manufacturing company in solving
its financial problems in as follows-
Everjoy company use benchmarking for solving its financial issues. In this, manager of
organisation are analysed its financial statements to its competitors so that by effective strategies

company will able to solve problems easily. Everjoy also use key performance indicators so that
overall capabilities of company for paying debts will get increases.
In comparison to Cross manufacturing company, managers of company to solve financial
problems analyse whole situation and then creates proper research in market. This method is
effective full but very time consuming and takes time for solving particular situation of
company.
In conclusion, it will be said that Everjoy company has better strategies for solving
financial issues of company in comparison to Cross manufacturing company.
B. Evaluating financial governance for pre-empt or to prevent financial problems
Financial governable is the process which helps the organisation in collecting, monitoring
and managing all the financial information throughout the business enterprises. It is an important
approach of management accounting that helps the management of the company in managing the
financial data of the company. It helps in ensures that data of the company are well secured and
will be available to the management whenever required. With the accurate and timely
information, the management of the company can take effective measures and strategies to
strengthen the financial position of the company and enhancing the financial performance. It
helps the company in making the financial policies, controlling funds in the company . Financial
governance is an important approach for the manager of the Ever Joy enterprisers in order to
make effective strategies and decisions bt getting timely and accurate data. It assist the company
to improve its financial performance which helps in preventing the financial problem that may
arises in the company.
CONCLUSION
By summing up the above report, it can be analysed that management accounting plays
an important role in making effective and efficient strategies and decisions for the successful
organisation. The present report has concluded briefly the difference between management and
financial accounting. The report has also included various management accounting system like
cost accounting, inventory management and job costing with their different types, respectively.
Furtherer, the report has helped to understand the different types of management accounting
reports and their importance for Ever Joy Enterprises. Moreover, the report has analysed the
importance of sound accounting system and accurate, timely and relevant information too make
a business organisation successful. Moreover, the report has concluded a calculation on the break

even analysis of Break Even analysis. Furthermore, the report has concluded planning tool for
budgetary control and their role in responding to the financial problem. At last, the report has
analysed financial governance role in preventing the financial problem in Ever joy enterprises.

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