You are a junior member of staff, in a medium sized firm of accountants, you started about six months ago and are training. Your Manager has asked you, as studying is fresh in your mind, to provide background information for a report he is going to write to justify and explain the nature and need for proper management accounting for a client. The client is a small businessCakes for Occasions Limited (C4O) it specialises in producing speciality cakes for occasions such as weddings, birthdays and christenings. They have small bakery with 45 staff, including managers, who manufacture the products and do all administration.

1. Information for Business Decisions Making
Case Study: Covering Aspects of Management Accounting-Cost Types-Absorption Costing-
Budgeting
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Abstract
1. Management Accounting
Accounting system takes note of economic activities happening in an organization. On the
basis of information supplied by accounting system, different stake holders take actions for
their benefits. One stakeholder is managers, using this information for the sake of
administering the business activities in an organization. This is known as management
accounting.
Difference between financial accounting and Management accounting
The goals of both are basically different. Management accounting helps managers in decision
making, implementing the strategy; provides the way of performing a job in better way; and
in doing cost-benefit analysis. Financial accounting mainly focuses on providing information
to the external stakeholders.
In every organization to maintain coordination and achieving the goal, various responsibility
centers like cost center, revenue center, profit center and investment center is opened where
and the accountability of each center is given to the manager for managing and control
purposes. A cost center is a responsibility center where the manager is accountable for the
costs only. Cost center incurs costs and does not directly participate in the profit of the
business. It even doesn’t participate directly in the revenue generation.