Management Accounting Practices in UK Entertainment

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Running head: MANAGEMENT ACCOUNTING
Management Accounting
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MANAGEMENT ACCOUNTING 1
Table of Contents
Introduction................................................................................................................................2
Task 1.........................................................................................................................................3
P1: Management accounting or its significant requirements.................................................3
P2: specific methods which are used for the management accounting reporting..................4
M1: Advantages of systems of management accounting or its application...........................6
D1: Management accounting reporting and management accounting systems.....................6
Task 2.........................................................................................................................................7
P3: Income statement by using absorption and marginal costing..........................................7
M2: Techniques of management accounting or produce the documents based on the
financial reporting..................................................................................................................8
D2: Some Financial reports which interpret data for certain business activities...................9
Task 3.........................................................................................................................................9
P4: Disadvantages or advantages of certain planning tools which are used for the budgetary
control....................................................................................................................................9
M3: The uses of various planning tools or their application..................................................9
Task 4.......................................................................................................................................10
P5: Use of systems of the management accounting for responding to financial issues.......10
M4: Management accounting helps the organization in making them success...................10
D3: Planning tools which are used for accounting respond.................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13

MANAGEMENT ACCOUNTING 2
Introduction
For any type of business enterprise, accounting is considered as the most important business
activity or functional unit. Moreover, the main branches included in accounting are financial
accounting and management accounting. Apart from this, the financial accounting
summarizes and recorded the financial statements and transactions. On the other hand,
management accounting refers to as the presentation regarding the financial data and
information (Otley, 2016). This accounting helps the management in making the decisions
effective. The given project will discuss the application of management accounting.
Additionally, in the UK, Excite entertainment operates the entertainment and leisure industry.
Some activities have been conducted by a cited organization are for promoting concerts and
festivals at numerous locations across the country.

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Task 1
P1: Management accounting or its significant requirements
The management manages the human force or resources together as well as the accounting
keeps the financial records as well as it reveals the loss and profit in a certain period. In an
organization, the management accounting is the report of certain financial data as well as it
also formulates certain policies for maximizing the profit in an organization. Besides these,
with the help of management accounting, the managers make plans or make a decision
regarding operational control (Maas, Schaltegger & Crutzen, 2016). Additionally, for
management, it translates that particular data into helpful information so that the management
of an organization can achieve its business objectives. For the internal purpose, management
accounting provides the financial information of an organization. However, the system of
management accounting is of numerous types which include:
 The system of Price- Optimization
 The system of Job Costing
 The system of Inventory Management
 The system of Cost Accounting
The system of Cost Accounting
This system forecast the price of the products for profitability analysis as well as it also
checks the flowing of the products through several stages. Moreover, the Cost Accounting
System determines the approximate price of a product (Quattrone, 2016). In addition to this,
process costing and Job order costing are the two main parts of a system of cost accounting.
The system of Price Optimization
The system of Price Optimization is also considered as the mathematical process as well as
this system finds the demand in the different levels of price. Moreover, the Price
Optimization System maintains the price or demand for a product. Some factors are there
which are affecting the most including:
 The scheme which manages all the essential components which are responsible for
making the profit.
 Value of a product for the party’s seller and buyer

MANAGEMENT ACCOUNTING 4
 Pricing planning
Apart from this, the Price Optimization system finds the initial stages of discount price,
promotional pricing and cost pricing. Besides these, for both internal as well as external uses,
the system prepares the data (Hopper & Bui, 2016). It is not so easy for a business person to
select the appropriate management system. In the businesses, the system is constructed for
increasing the profit. Additionally, it also helps in making the strategy appropriate, makes the
decisions more easy or accurate as well as it also helps in production and planning. In various
departments of an organization, the system of management accounting is used such as sales,
finance, operation and human resource. The financial status within the organization can be
easily checked with the help of the management accounting system.
The system of Job Costing
The system gathers the information regarding the cost or price for the service job and specific
unit. Moreover, the system is used in various construction industries as well as the system
accumulates all the information into three main categories which include:
 Overhead Cost
 Direct Labour
 Direct Materials
System of Inventory Management
Inventory characterize the material, good and stock of a business, as well as the key function
of the Inventory Management System, is to create the purchase order, as well as labels of
print barcode, receive the materials to pick, ship, adjust and relocate. The system also
controls the operations of the warehouse and stock room.
P2: specific methods which are used for the management accounting reporting
In some circumstances, the reports are often considered as a deciding part for the
organization because it helps the employers in understanding the actual performances of a
business. In business, the management accounting based report is made for making more
profit. Additionally, some factors are there which can effects the particular report are more
reliable, up to date and accurate (Bromwich & Scapens, 2016). The report is specifically
prepared for making good decisions and for making the planning. Most of the accounting
reports are processed or prepared in a particular unit, a month and quarter periods on the basis

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of the requirements as well as many important decisions are made on the basis of these
reports. Various methods are used for the reports of the management accounting which are as
given below:
Account Receivable Aging Report
In this particular report, the information has been given for offering credit to the consumers.
Moreover, the report helps the managers in identifying the defaulters and it also helps the
managers in finding the particular problem in the process of collection (Dekker, 2016). The
report provides information about the credit balance on the basis of the age as well as
separate columns are included in the report for offering credit to the customers. Moreover, it
also helps in adjusting the credit policies. The company will make some strict policies for the
defaulters.
Budget report:
it is also referred to as the document which estimates the future expenses and income. By
using this report, the businessman can use past information for making the profit in their
future. This report is used for measuring the performance of a business. The report helps the
manager to provide the incentives to the workers as well as it also reduces the cost.
Performance Report
The performance report is prepared for analyzing and for determining the performances of a
company. Additionally, the report is prepared for both the organization and for its employees.
Besides these, the manager makes the strategy with the help of this performance report
because this report will help that manager in achieving the business goals for the organization
(van Helden & Uddin, 2016).
Job Cost Report
It involves all the articles of the business-like material cost, overhead cost, labour cost, etc. It
determines the price of items. The entire costs divided into total items created. It an overview
of the total cost arises in a single project compared to the forecast revenue, the record of the
cost of producing the individual unit.

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Manufacturing and Inventory Report:
The Report is the compacted account of some products as well as the supply of all types of
specific goods. The main purpose of the Manufacturing and Inventory Report is to maintain
the balance between customer services and inventory investment.
M1: Advantages of systems of management accounting or its application
Some information has been provided by the management accounting which is associated with
the management. Moreover, it helps the organization in making appropriate planning so that
the organization can achieve its desired goals. Various reports are prepared in management
accounting (Shields, 2015). As well as these reports provide a review about the performances
of a company. With the help of the management accounting, the company can understand
about its financial status. In addition to this, it also helps in the process of decision making.
After using the management accounting the company are more focusing on their available
resources. In an organization, the various benefits have been provided by the management
accounting system which includes helps in making a quick decision, increase the profitability
of the organization and increase the effectiveness within the organization.
D1: Management accounting reporting and management accounting systems
Budgeting report In most of the organizations, the budget reports are
used for measuring their performances and for the
various departments the budget reports are produced.
Account receivable aging report Account receivable aging report delineates the unpaid
consumer services. Only the personnel have the right
to use the aging report for determining the invoices
which are overdue for the payment.
Performance reports In most of the companies, the performance reports are
made for analyzing business performance (Bobryshev
et al., 2015). The link has been found between the
management accounting systems and reporting tool.
Task 2
P3: Income statement by using absorption and marginal costing
Price or cost refers to as the amount which is invested by any type of businesses for their
production and manufacturing. Moreover, the cost is divided into numerous categories which

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include inventory cost, material cost, labour cost, indirect cost and direct cost (Turner et al.,
2017). Some of the techniques of the cost analysis are job costing, absorption costing, batch
costing, ABC costing and marginal costing.
The method of marginal costing is used for the process of decision making as well as the
marginal costing is also considered as variable costing, direct costing and contribution
costing. It used variable costs for making the decisions.
Totalling of the unit cost
Particulars Variable Costing Absorption cost
cost of Variable manufacturing 2 2
Fixed manufacturing operating cost
( that is planned and actual)
- 4
Prime cost 4 4
Cost of Unit Product 6 10
Absorption Income Statements
Units 8,000
Net operating income 32,000
Gross margin 40,000
Cost of product sold( $ 10.5 per unit) 80,000
Sales ( $ 16 per unit) 1,20,00
Variable Income Statements
Units 8,000
Cost of products sold ( $ 5 per unit) 60,000
Sales ( $ 16 per unit ) 1,20,000
Profits 20,000
Absorption costing refers to as the tool of cost analysis as well as this costing show the
minimized price of sales or increased revenue within the business. Apart from this, the tool is
not that much effective in analyzing the profitability within the organization.
Marginal costing evaluates numerous kinds of decisions. In some areas, the marginal costing
has played a beneficiary role such as cost control, outsourcing, profit-volume relationships,
internal based inventory reporting, customer profitability and cost reporting. The marginal

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costing determines which consumer is helpful for the organization (Clarke et al., 2019). It is
very difficult for the marginal cost to separate or classify the fixed cost and variable cost. The
main disadvantage associated with the marginal cost that it is used for external reporting.
M2: Techniques of management accounting or produce the documents based on
the financial reporting
Several techniques and tools of management accounting are there which includes budgetary
control, cost accounting, fund based flow analysis, analysis of cash flow, planning and
financial statement.
By using these techniques, the chosen company can easily generate documents of financial
reporting. Moreover, these documents are cash flow analysis, balance sheet and income
statement (Hemmer & Labro, 2017). All these types of financial documents and statements
should be generated in an appropriate manner or order. Besides these, the technique of cost
analysis outlines the costs on numerous bases like department, product, branch and process.
This technique also helps in analyzing the costing or allows the identification of gaps and
deviation. The management information systems are used for providing the open
communication within the organization and due to this the employees’ feels very grateful in
accomplishing their duties as well as it also helps in taking the organization in taking quality
decisions.
Additionally, cash flow analysis is used across the organization for identifying the flow of
cash. With the help of the cash flow analysis, the organization can easily understand the
causes which are responsible for the changes in the cash. Thus, it can be said that the various
techniques of management accounting are used within the organization for generating the
documents of the financial reporting as well as it also provides authentic or reliable data
within the short period of time.
D2: Some Financial reports which interpret data for certain business activities
In some circumstances, the financial reports represent the actual picture of an organization as
well as it helps in taking appropriate decisions (Wong, 2018). Besides these, some financial
reports are prepared on the basis of the functions and activities of the company. The financial
reports are beneficial in the organization because it interprets the financial statements and
information about numerous business activities. Thus, it can be asserted that the financial

MANAGEMENT ACCOUNTING 9
reports should be reliable and accurate so that some business decisions will be made in an
appropriate manner.
Task 3
P4: Disadvantages or advantages of certain planning tools which are used for the
budgetary control
Numerous advantages of certain planning tools are there for budgetary control. Moreover,
forecasting is considered as the main benefits of budgeting which are used for identifying the
costs. Additionally, it also helps in setting up the price. Some planning tools are there for the
budgetary control which also helps during the projection of marketing, rent and wages.
Planning tools are very flexible as well as the planning tools for the budgetary control gain a
competitive advantage in the marketplaces. Some disadvantages are also there which are
associated with the planning tools. The main disadvantage is that planning tools consider only
financial outcomes and aspects (Prihastiwi & Sholihin, 2018). The main factor is that the
budget is numerical in nature and due to this; the qualitative aspects are not included in this.
The budgetary control is not emphasizing on the requirements of the consumers and due to
this reason, the departmental conflicts arise within the company.
M3: The uses of various planning tools or their application
Planning tools such as Buxfer, Quicken and YNAB are used for forecasting or preparing a
budget. Moreover, YNAB is one of the best budgeting tools which is used for encouraging
savings. Additionally, this particular tool is made on the basis of the earned revenue as well
as it provides various reports and graphs. This is the appropriate budgeting tool which is used
by the chosen organization. With the use of this planning tool the chosen organization can
check where the cash is going and after that it becomes easy for the organization to find the
divergences as well as they can easily make some necessary adjustments. In addition to this,
the Quicken is another planning tool which is designed for handling some financial aspects
which include budgeting, reporting and investment. The cited company used Buxfer for
monitoring the spending as well as it keeps the track of certain upcoming bills. By using this
planning tool the organization can easily project the saving and earning in the future.
However, this tool is used for managing the expenses of the group.

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Task 4
P5: Use of systems of the management accounting for responding to financial
issues
In every company, the management accounting systems also played a major role and with the
help of these systems, various business activities are carried in an effective manner. In the
company, the management accounting is used for dealing with some financial issues which
arise in certain workplaces. After analysing the case of an individual company, it has been
identified that management accounting helps a particular organization in taking appropriate
decisions. Moreover, the management accounting also helps that particular organization in
managing the financial resources and due to this, unfavourable conditions have been avoided
in the organization (Järvenpää & Länsiluoto, 2016). By using the management accounting, all
the business resources are managed in an appropriate manner.
in another case of a business, it has been found that the strategies of management accounting
are developed for dealing with some financial problems. Thus, it can be said that this is an
appropriate efficiency of the management accounting can help the organization in avoiding
some unfavourable consequences.
M4: Management accounting helps the organization in making them success
For dealing with the certain financial issue within the organization, the management
accounting practices have played a major role. In addition to this, management accounting
also helps in making effective decisions as well as it also helps in proper planning. With the
assistance of this concept, the financial crisis has been avoided within the organization. After
the use of management accounting, the process of decision making becomes easier. The
process of decision making becomes easier with the help of management accounting. Besides
these, the major effectiveness of management accounting is to enhance the profitability in a
business. In addition to this, in the business, management accounting enhances the profits
with the help of budgetary control based activities and capital budgeting. However, when the
appropriate budgets are made in those cases all types of financial resources within an
organization are managed appropriately (Pavlatos & Kostakis, 2015). MA also helps the
organization in increasing its competitive advantage. The management accounting provides
full support to the organization for enhancing their financial performance. The fluctuations in
financial funds can also be identified with the help of management accounting. After using
management accounting, all the monetary resources have been managed properly.

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D3: Planning tools which are used for accounting respond
Various planning tools of accounting are used by the organization for planning their business
activities, as well as all these business activities, are planned in an appropriate manner with
the help of planning tools. Financial planning, financial statement analysis, cash flow
analysis and marginal costing are the major planning tools for accounting. These planning
tools are used by an organization for conducting the practices of management accounting
appropriately (Cleary, 2015). Moreover, cash flow analysis represents the major activities
which include financing, investing and operating activities. These activities are used for
managing the financial resources within the firm.