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ACCA Applied Knowledge · Business and Technology · Accounting and finance functions within business organisations

A manufacturing company's management accountant produces a monthly report comparing actual costs with budget for each department, with explanations of the differences. Who is the main user of this report?

Internal managers are the main users. A report comparing actual costs with budget by department is management accounting information, designed to help managers control operations and act on variances. It is not prepared for external parties such as auditors or tax authorities, who rely on statutory financial records.

  1. AThe company's external auditors, who use it to form an opinion on the financial statements
  2. BInternal managers, who use it to control operations and take corrective actionCorrect
  3. CTax authorities, who use it to calculate the company's tax liability

Explanation

Budget-versus-actual reports are management accounting information prepared for internal managers to monitor performance and take corrective action. External auditors and tax authorities rely on statutory financial statements and accounting records, not this internal report.

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