Management Accounting · Accounting for management

Purpose of Management Information: Planning, Control and Decision-Making

Updated 11 October 2026 · Fact-checked

Management information helps managers do three jobs: plan future activity, control actual performance against the plan, and make decisions between alternatives. Anthony's hierarchy matches these to three levels: strategic (long-term, external, summarised), tactical (medium-term, internal, detailed) and operational (day-to-day, very detailed). To answer questions, identify the time horizon and the manager's job.

Understand Purpose of Management Information: Planning, Control, Decision-Making

Management accounting exists to give managers information they can use. Managers do not need information for its own sake. They need it to do three things: planning, control and decision-making.

Planning means deciding what the organisation wants to achieve and how. It looks forward. Examples are setting objectives, preparing budgets and forecasting sales. Control means checking what actually happened against the plan, finding differences (variances) and taking corrective action. It looks at the present and the recent past. Decision-making means choosing between alternatives, such as make or buy, or whether to accept a special order. It uses relevant future information.

These three activities happen at different levels. Robert Anthony described three levels of management. Strategic planning sets long-term objectives and the resources to reach them. It is done by senior managers, such as directors. Tactical (management control) makes sure resources are used effectively and efficiently to meet those objectives. It is done by middle managers. Operational control makes sure specific tasks are carried out properly day to day. It is done by supervisors and front-line managers.

The type of information changes with the level. Strategic information is mostly external, summarised, long-term, forward-looking, uncertain and often non-financial as well as financial. Operational information is mostly internal, detailed, short-term, accurate and quantitative, and often produced frequently. Tactical information sits between the two: mainly internal, summarised from operational data, produced monthly or quarterly, such as budget variance reports.

In the exam, link the scenario to the level by asking: how far ahead does the manager look, and who is the manager? A director deciding to enter a new country is strategic. A department head reviewing monthly variances is tactical. A supervisor checking today's output is operational.

Key formulas to remember

Three purposes of information: Planning (look ahead) + Control (compare actual with plan) + Decision-making (choose between options); Planning and control form a loop: control results feed into the next plan.
Strategic level (Anthony): Long-term, senior managers, external and internal, summarised, uncertain, forward-looking; Sets objectives and decides the resources and policies to achieve them.
Tactical level (Anthony): Medium-term, middle managers, mainly internal, summarised from operational data, periodic; Also called management control. Uses budgets and variance reports.
Operational level (Anthony): Day-to-day, supervisors, internal, detailed, accurate, frequent; Ensures specific tasks are carried out effectively and efficiently.

How to solve Purpose of Management Information: Planning, Control, Decision-Making questions

Use this method for any question on the purpose of management information or the levels of management.

1Read the scenario and note who the manager is (director, middle manager, supervisor).
2Identify the time horizon: long-term, medium-term or day-to-day.
3Decide the level: strategic, tactical or operational.
4Decide the activity: planning (setting a future course), control (comparing actual with plan) or decision-making (choosing between options).
5Match the information characteristics to the level: external or internal, summarised or detailed, future or past, frequent or occasional.
6Eliminate options that mix features from different levels, then choose the best fit.

Quickest way: Level and purpose shortcut

When to use it: Use in Section A multiple choice questions when you have about 30 seconds per mark.

Spot the time word: years or long-term means strategic; months means tactical; daily or weekly means operational.
Spot the data word: external or summarised means strategic; detailed and accurate means operational.
Spot the verb: set objectives or plan is planning; compare or variance is control; choose or evaluate is decision-making.
Pick the option that fits both the level and the verb.

Common mistakes in Purpose of Management Information: Planning, Control, Decision-Making

Treating control as the same as planning.
Budgets appear in both, so students blur them.
Fix: Planning sets the budget before the period. Control compares actual results with it afterwards and takes action.
Saying strategic information is detailed and accurate.
Students assume senior managers want the most precise data.
Fix: Strategic information is summarised and often uncertain because it looks far ahead and uses external data. Detail and accuracy belong at operational level.
Placing monthly variance reports at operational level.
Variances feel like day-to-day work.
Fix: Periodic reports to middle managers on budget performance are tactical. Operational reports are frequent and task-specific, such as daily output.
Thinking decision-making uses past costs.
Past costs are easy to find in the accounts.
Fix: Decisions depend on relevant future information. Past costs are sunk and do not change the choice.
Assuming information is only financial.
Management accounting sounds like money only.
Fix: Management information includes non-financial data such as quality, customer satisfaction and units, especially at strategic level.

Worked examples

Example 1

A production supervisor reviews the number of units completed and machine downtime each day to make sure the shift meets its target. At which level of Anthony's hierarchy is this, and what is the main purpose of the information?

Show the solution

The manager is a supervisor, which points to the operational level.
The time horizon is daily, which is short-term.
The information is detailed and frequent, such as units and downtime.
The activity is checking performance against a target and correcting problems, which is control.

Answer: Operational level; the purpose is control.

Example 2

Which ONE of the following is a characteristic of information used at the strategic level? (A) Produced daily and highly accurate (B) Mainly internal and very detailed (C) Summarised, with a significant external element (D) Concerned with the current week's tasks

Show the solution

Option A describes operational information: frequent and accurate.
Option B describes operational information: internal and detailed.
Option D describes a very short time horizon, which is operational.
Option C matches strategic information: summarised and drawing on external sources such as market and competitor data.

Answer: C

Exam tips

Link every scenario to a level using who the manager is and how far ahead they look.
Remember the three purposes by their time focus: planning looks ahead, control looks at actual versus plan, decisions choose between future options.
In multiple response questions, check each statement separately and watch for words like only or always.
For longer written tasks, give one clear feature of the information and then link it to the level, rather than listing features without explanation.
Do not spend long on this topic in the exam. Most questions are quick classification items, so answer and move on.

Practice questions from Accounting for management

Purpose of Management Information: Planning, Control, Decision-Making in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Purpose of Management Information: Planning, Control, Decision-Making: frequently asked questions

What is Anthony's hierarchy?

It splits management activity into three levels: strategic planning, management (tactical) control and operational control. Each level has different managers, time horizons and information needs.

How does management information help planning, control and decision-making?

For planning it provides forecasts and budgets. For control it shows actual results against the plan so managers can act on variances. For decision-making it gives relevant future costs and revenues to compare alternatives.

What is the difference between strategic and tactical information?

Strategic information is long-term, summarised and has a strong external element. Tactical information is medium-term, mainly internal and produced regularly, such as monthly budget reports.

Is operational information always financial?

No. Operational information is often non-financial, such as units produced, hours worked or defects found. It is detailed and frequent.