Question

SUBJECT: MANAGEMENT ACCOUNTING

ANSWER QUESTION A:

1. The following data belongs to a company that uses high-low method to obtain both the fixed cost and unit variable cost of production:

Month	Output in units	Total cost (kshs’000)
July	55	7250
August	58	8100
September	60	8200
October	65	8500
November	63	8400
December	65	8600

                                                                                               

2.     Explain the differences between Financial accounting and management accounting

Answer 1

Difference between management and financial accounting

Objectives	The main objectives of financial accounting are to disclose the end results of the business, and the financial condition of the business on a particular date whereas main objective of managerial accounting is to help management by providing information that is used to plan, set goals and evaluate these goals.
Audience	Financial accounting produces information that is used by external parties, such as shareholders and lenders on the contrary Managerial accounting produces information that is used within an organization, by managers and employees
Optional?	It is legally required to prepare financial accounting reports and share them with investors on the other hand Managerial accounting reports are not legally required.
Focus	Financial accounting focuses on history; reports on the prior quarter or year however Managerial accounting focuses on the present and forecasts for the future.
Rules	Rules in financial accounting are prescribed by standards such as GAAP or IFRS. There are legal requirements for companies to follow financial accounting standards whereas Managerial accounting reports are only used internally within the organization; so they are not subject to the legal requirements that financial accounts are.