B292 Management Accounting

Question 1

Answer A

The operating budget mainly refers to list all income as well as expenses that a business entity generates after startup. Some of most important components of operating budgets are sales budget, production budget, direct material purchase budget, direct labour budget, overhead budget, bottom line, selling and administrative expenses budget. Usually, it is seen that operating budgets are being prepared by service, non-profit organization as well as service industry as such budgets proves to be more useful for management of business entity to gain clear understating about their business operational activities and even intend to help management of organization to make efficient and profitable business decision. The operating budgets will help management of organization to know about expenses as well as revenues generated from daily business operational functions of company (Hom 2020). In simple terms it could be stated that operating budgets mainly intended to remained concentrated towards operating expenses, that even takes in to account cost of produce sold in market or cost of goods sold as well as revenues or income. Even for non-profit organization, operating budgets intend to be very helpful for management as it enables better investment decision, budgeting for gaining more profitability, gaining more confidence in pricing, as well as various other benefits. Usually, it is seen that operating budgets is breakdown into fixed and variable costs as well as revenues and other expenses (Ruliana et al. 2015).    

Answer B

Generally, ethical conflicts are being faced in terms of honesty, responsibility, decency, and conflict of interest while preparing budgeted income statement for division. It could be stated that ethical conflict will mainly arise in terms of difference between division manager’s goals and organizational goals (Hansen, Mowen and Heitger 2021). The division manager might prepare budgeted income statement that will mainly aimed towards achieving division goals and objectives. However, senior management and executives might not approved division manager’s budgeted income statement that will lead to conflict of interest (Weiss 2014). It might be possible that perspective of division manager and senior executives could different thus, conflict of interest might arise (Hall 2015).      

Question 2

Answer A

Part 1

The difference between information prepared by financial accountants and managerial accountants are stated below:

The information prepared by financial accountants mainly aimed towards providing financial information to parties outside business entity. Whereas information prepared by managerial accountants mainly aimed towards helping managers within an organization in order to make well-informed business decisions. In simple terms it could argued that financial accounting information mainly remained focused towards various information that are related to functioning of business entity and provide such information to users of financial reports. Managerial accounting information prepared various essential information that will proves to be useful as well as helpful for managers of an organization in order to evaluate overall performance and devising plans of business entity for future use (Warren, Reeve and Duchac 2015).      

Part 2

The specific features related to managerial accounting information are stated below:

The managerial accounting information should intend to comply with several specified features that takes into account verifiability, objectivity, timeliness, comparability, reliability, relevancy, as well as understandability. It should be noted that all types of managerial accounting information should has ability to help management of an organization in planning, controlling as well as decision-making process (Butler and Ghosh 2015). Management accounting information mainly aims towards future business decision that will be helpful for an organization as well as is mostly selective in nature. Even management accounting information could be used to study cause and effect relationship.    

Answer B

Part 1

One example of a financial accounting report that will be helpful to owners is profit and loss statement that will help owners of organization to gain better understanding about financial performance of entity as well as will help owners of company to analyze revenues and profit generated during a particular financial year.

One example of a managerial accounting reports that will be useful to manager of organization is budget that mainly refers to a profit plan and is a formal quantitative plan that could be used by manager of organization for future decision-making process.

Part 2

The two examples of nonfinancial measures used by a pizza parlor that serves food in the restaurant and offers delivery services are analyzing customer satisfaction as well as workforce development. It could be stated that analyzing customer satisfaction will help management of organization gain clear understanding about customer needs and preferences that will help company to make improvement in its existing strategies related to products and services. Even knowing about workforce development will help management of organization to efficiently carry out performance evaluation of its workforce.

Part 3

1. In this case it could be stated that information should be included in managerial accounting report as it will be beneficial for internal users such as manufacturing department to gain clear understanding about numbers of defective goods produced as a percentage of all goods produced.
2. The information should be reflected in financial accounting report as it is essential that users of financial reports should have information about accounting standards and policies that are used in preparation of financial statements.
3. The department budget will be helpful for managers of organization in their decision-making process thus, this information is a part of managerial accounting report.
4. The information regarding balance sheet of an organization should be included in financial accounting report as users of financial reports should know that financial statements are prepared as per GAAP accounting standards. 
   
   

References 

Butler, S.A. and Ghosh, D., 2015. Individual differences in managerial accounting judgments and decision making. The British Accounting Review, 47(1), pp.33-45.

Cooper, J., Mitchell Jr, D., Eckerle, K. and Martin, K., 2016. Addressing perceived skill deficiencies in student affairs graduate preparation programs. Journal of Student Affairs Research and Practice, 53(2), pp.107-117.

Hall, J.A., 2015. Accounting information systems. Cengage Learning.

Hansen, D.R., Mowen, M.M. and Heitger, D.L., 2021. Cost management. Cengage Learning.

Hom, D., 2020. Capital Improvement Programs (CIPs): Operating Budgets and. In Encyclopedia of Public Administration and Public Policy, Third Edition (pp. 1-8). Routledge.

Ruliana, T., Soegiarto, E., Yudhyani, E. and Latif, I.N., 2015. Operating budgets as the management control. Scientific Papers: Management, Economic Engineering in Agriculture & Rural Development, 15(3).

Warren, C.S., Reeve, J.M. and Duchac, J., 2015. Financial & managerial accounting. Cengage Learning.

Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.

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