CHAPTER 3: PRESENTING INFORMATION

Introduction
The management accountant has to provide information to management to help them make decisions, and it
is important that the information is presented to them in a form that is easy for them to use.
This may be in the form of a report, or a table of figures, or as a chart or graph.

Data Visualisation (Charts)

Once the data has been analysed and cleaned (errors, mistakes, and irrelevant data removed; arranged
meaningfully), it can be presented and communicated to the person(s) who will be using it in a way that they
will find easy to understand.

Advantages and Disadvantages

Data visualisation convert raw data into a visual format that enables humans to hold interest and understand
the message the data is meant to portray.
A good visualisation tells a story, and allows easy identification of trends and outliers.
The disadvantage is that the story being portrayed by the visualisation may be biased or inaccurate, and may
be an attempt to manipulate the understanding of the user. Also, it may indicate causation when none exists.

Types of Data Visualisation

Format
Example Description
Name
Line chart Line charts are useful for showing trends over
time, such as sales revenue growth.

Bar chart Bar charts help show comparisons. For example, a

company might wish to compare budget
expectations against actual results.
Pie chart Pie charts can show a relative comparison to a
whole, such as sales in different regions.

Scatter Scatter graphs show results over two axes, which

diagram helps identify correlations and trends.

Table This is a way of presenting actual numbers in a

format that is easy to understand
Charts and graphs
In many cases, management do not need to see the actual numbers (and indeed the actual numbers may
confuse them). Often a chart or graph can present the information more clearly.

Simple bar chart:

Compound bar chart:

NB:
There are also dashboards which might be a combination of several visualisations and charts to give users a
quick glance of the information they need.

Illustration 1
Select the best format to present the information given in each scenario. (Line chart, bar chart, pie chart,
scatter chart, or table)
Best format
(Line chart, bar chart, pie
chart, scatter diagram or
Information table)
A company wants to understand how production costs respond to changes in
Line chart
activity.
An organisation has just received the final figures for its actual material costs
Bar chart
last year and wants to compare them to the budget’s original estimates.
A company wants to know which product segment contributes the most
Pie chart
revenue relative to total revenue for the period.
A company wants to display the results of a detailed survey of inventory costs
for different products, showing the current month, prior month, prior year and Table
% changes.
A company wants to compare recorded employee time spent on producing a
Scatter diagram
product unit and its final quality score to determine if there is any link.
A Single Data Series Over Several Periods (Simple Bar Chart)

Multiple Data Series Over Multiple Periods (Compound/Clustered Bar Chart)

Stacked Bar Chart

A stacked bar chart shows a data series’ proportions to a total figure better than a compound bar chart. In this
example, total sales and their upward trend are easily identified.
It is also reasonably clear that the South (red) and East (green) are experiencing sales growth as a proportion
of total sales. However, the exact proportions of each division are difficult to determine without additional
labels, and comparing divisions to each other is challenging.

Presenting and Interpreting Data (Line Charts)

The above simple line chart shows a gentle increase in the sales trend over five years.
Whereas the chart below shows a more significant rate of change in total sales:

Line chart with Multiple Data Series

The gap between the lines is profit. So the narrowing gap in 20X2 and 20X3 means that profit is shrinking.
It is easy to see the sales and costs trend and how they compare.

Presenting and Interpreting Data (Scatter Diagram)

There is a positive correlation between output units and total costs (more output, higher cost). However, note
that some cost variation occurs at some output levels.

A line of best fit can be drawn.

The line of best fit is helpful in forecasting outcomes. From the above example:
 If the output is between 100 to 120 units, the expected total cost would be between $2,500 and $2,800.
 A forecast made within the range of a data set is an interpolation.
 If output exceeds 140 units, the expected cost would be above $3,000.
 A forecast made outside the range of a data set is extrapolation.

Inappropriate Data Visualisation

It’s essential to use the proper visualisation to convey the appropriate meaning to the user. For example, the
wrong chart type will be misleading and may lead to dysfunctional decision-making.

There are a couple of errors in this example:

• The use of a line to connect the data points suggests change over time. However, this is not the case, as
the x-axis contains names, not periods.
• The title and legend of the chart are meaningless.
• The numbers on the y-axis are meaningless.
• It is not clear what the words on the x-axis represent.

Presenting Management Information

One way of ensuring management receives information that focuses their attention where it is most needed is
to use a management dashboard.
A dashboard report or screen layout measures and presents selected information and indicators relating to
critical areas of the business. The dashboard report or screen presents vital information in a clear format (like
a car dashboard), so management can respond quickly with appropriate decisions.

Dashboards often include charts and tables, presenting information in a way that makes it easy to interpret
and digest. Management accountants should be instrumental in designing dashboards to ensure the
information included covers the most critical areas and is easily understood.

Chapter 3 Questions
1. The cost of materials for product A are as follows.
Material W: $2,250
Material X: $3,000
Material Y: $3,600
Material Z: $150
If the material proportions were displayed on a pie chart, how many degrees would material Y represent?
A. 90 degrees
B. 120 degrees
C. 144 degrees
D. 204 degrees (2 marks)

The following information relates to questions 2 to 3.

2. The data may be illustrated by the following chart. What type of chart is it?

A. Simple bar chart

B. Multiple bar chart
C. Component bar chart
D. Ogive (2 marks)

3. Which one of the following statements is true?

A. Sales of mint choc chip rose steadily over the four months
B. Total sales fell in the month of July
C. In June, the gap between sales of strawberry and sales of chocolate reduced
D. Sales of blueberry rose in May and July (2 marks)

4. The table below shows a company's sales figures for the first six months of the year.

What kind of graph or chart would you use to show the fluctuations of total monthly sales figures across the
six months?
A. Percentage component bar chart
B. Scatter diagram
C. Line graph
D. Pie chart (2 marks)