Types of Management Accounting Systems

Question :

Scenario 1 – (LO1)

You have been interning at a leading Accountancy Firm. One of the clients called Excite Entertainment Ltd deals in leisure and entertainment industry in the UK. The main activities is the promotion of concerts and festivals at various locations throughout the United Kingdom (UK).

They are consulting your organisation on writing a Reference Manual for their Management Accounting Department. Your Manager has asked that you produce the report and cover the following:

Section A: Title -Understanding Management Accounting Systems 

a) Distinction between Management Accounting and Financial Accounting.

b) Cost accounting systems (Direct Costs and Standard Costing)

c)Inventory Management Systems

d)Job Costing Systems

e) Analyse the benefits of the above management accounting systems.

Section B: Techniques used for Management Accounting Reporting

a) Discuss different types of managerial accounting reports

b) Examine why information presented should be accurate, relevant to the user, reliable up to date and timely.

1. Analyse how management accounting systems and management accounting reporting should be integrated within Excite Entertainment Ltd Operational processes.

Scenario 2 – (LO2)

Excite Entertainment Ltd is reviewing its Management Accounting Systems, especially how costs are allocated. The company has been allocating overhead costs arbitrarily but is considering using either Absorption Costing or Marginal Costing Method to calculate the profitability of every operations with effect from September 2019.

The following information is available from different cost centres of the Organisation:

Selling price per Unit                                                                       £15

Prime Cost per unit                                                                            £4

Variable Production costs per unit                                                     £2

Budgeted fixed production overheads per month                        £40,000

Budgeted production per month                           10,000units

Budgeted Sales per month                                      8,000units

Opening inventory for September                       500units

Required:

 Provide a financial report for the month of January 2020 comparing profit or loss using Marginal Costing and Absorption Costing techniques. Evaluate the results and suggest management on your critical analysis of the advantages and disadvantages of each method used referring to the results.

Scenario 3 – (LO3)

 As a newly qualified Management accountant, you have been asked by your line manager to provide a report which examine the organisations use of planning tools to ensure financial stability and performance as well as method in which management accounting has played a significant role in avoiding and solving financial issues.

This section is in the form of two individual management report:

Part A: Differentiate between three planning tools used in management accounting, reflecting how effective you judge each to be and why.

LO4

Part B: Using the information, provide below, compare ways in which management accounting is applied in dealing with financial problems and preventing financial problems of an organisation.

The following information is provided for the calculations of cost, volume and profit analysis: Estimated fixed costs                                  £120,000.00

Variable costs per unit                           £10.00

Proposed selling price per unit             £40.00

Additionally, the Finance Manager has indicated the estimated profit that can be generated from the above figures is not adequate for long term plans and therefore want to see profits increased to £90,000. Suggest the sales team how many units needs to be sold to achieve profit level, and management of any other measures that can be put in place for the team.

Assessment Criteria

INTRODUCTION

Accounting refers to the process of recording the financial of the business. Accounting process deals with making summary, analysis and reporting the transactions to the regulators, oversight agencies and the tax authorities. Financial statements prepared in the accounting are the brief summary of the financial transactions carried by the organization represent the operation of business and its position. There are different types of accounting that has been used for different accounting purposes within organization. Financial accounting (FA) and management accounting(MA) are the two accounting that are mostly in practice and is used by most of the organizations. Present report will reveal about the management accounting. It will include the difference between MA & FA, other accounting systems will also be explained. It will provide knowledge about the different methods use in the management accounting and reporting. It will also involve the understanding about the planning tools use in management accounting for ensuring financial performance and stability. Different management accounting with the use of numericals will also be explained in the present report. Project will be providing detailed information and understanding about the management accounting.