Compare and contrast three planning tools used in management accounting, indicating how effective you judge each to be and why.
LO1 Demonstrate an understanding of management accounting systems
LO2 Apply a range of management accounting techniques
LO3 Explain the use of planning tools used in management accounting
LO4 Compare ways in which organisations could use management accounting to respond to financial problems
You have been working as An Intern at a leading Accountancy Firm. One of the clients calledExciteEntertainmentLtdoperatesinleisureandentertainmentindustryintheUK.Oneoftheir majoractivitiesisthepromotionofconcertsandfestivalsatlocationsthroughouttheUnitedKingdom (UK). They are consulting your firm on writing a Reference Manual for their Management Accounting Department. Your Manager has asked that you prepare the first draft of the Manual for the client under the followingheadings:
Section A: Title -Understanding Management Accounting Systems
a. Differences between Management Accounting and FinancialAccounting.
b. Cost accounting systems (Direct Costs and StandardCosting)
c. Inventory Management Systems
d. Job CostingSystems
e. Evaluate the benefits of the above management accounting systems to your client
Section B: Methods used for Management Accounting Reporting
a. Describe different types of managerial accountingreports
b. Explain why information presented should be accurate, relevant to the user, reliable up to date and timely.
c. Critically evaluate how management accounting systems and management accounting reporting should be integrated within Excite Entertainment Ltd Operational processes.
ExciteEntertainmentLtdisreviewingitsManagementAccountingSystems,especiallyhowcostsare allocated.Thecompanyhasbeenallocatingoverheadcostsarbitrarilybutisconsideringusingeither Absorption Costing or Marginal Costing Method to calculate the profitability of every operations with effect from September 2019.
Produce a financial report for the month of September 2019 comparing profit or loss using Marginal CostingandAbsorptionCostingtechniques.Interpretthe results andadvisemanagementonyour critical evaluation of the benefitsand limitations of each method used referring to theresults.
Part A: Compare and contrast three planning tools used in management accounting, indicating how effective you judge each to be and why. Your judgements should be supported with evidence.
(LO4) Part B: Using the information provided below, compare ways in which management accounting is applied in dealing with financial problems and preventing financial problems in 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.Advise the sales team how many units needs to be sold to attain this profit level, and management of any other measures that can be put in place for the team. Critical evaluation of assumptions made must be provided.
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