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

A manufacturing company's production director asks for a report showing the expected cost per unit of each product under three different output levels for next year. Which type of information is being requested?

This is management accounting information. It is a forward-looking, scenario-based analysis prepared for an internal user to support planning decisions. It has no statutory format and is not intended for external reporting, which distinguishes it from financial accounting.

  1. AStatutory financial information, because it concerns costs recorded in the ledgers
  2. BManagement accounting information, because it is forward-looking and prepared for internal decision-makingCorrect
  3. CFinancial accounting information, because it concerns the cost of inventory

Explanation

Projected unit costs at alternative output levels are a planning tool for internal managers, with no statutory format or external audience. This is management accounting. Option C is wrong because inventory valuation for financial statements uses actual cost, not scenarios.

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