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Sheng reckons that individuals, businesses, nonprofit organizations, and government can use managerial accounting to evaluate their business performance. More so, Sheng notes that managerial accounting follows no accounting standards or general principles and hence companies can choose specific tools and techniques for managing their businesses (Caplan 1). Sheng observed that business could implement managerial accounting by themselves or hire professional accountants with knowledge on management accounting to carry out this role. In Sheng’s case, her relative uses certain managerial accounting techniques to evaluate the business performance of the food store.
Most importantly, Sheng says that various management accounting techniques help their family in making important management decisions. She named the techniques he relative uses that included budgets, variance analysis, target costing, activity based costing, just – in - time system, and break-even analysis. Sheng states that budgets are important in the food store as they create a financial road map for the management to follow while planning on how to spend business capital in the future. Sheng notes that the process of making the food store’s budget involves the analysis of past production figures, labor cost, and raw material costs used to do specific things in the business. She hence says that they use another technique called variance analysis to ensure that the management follows the budget and provides information on how to handle potential variances. Sheng states that variance analysis involves the calculation of variances on the assumed labor costs, and level of sales in the food store. As such, variance analysis helps the management of the food store to choose which department in the food store needs changes. On the other hand, Sheng state that her relative uses Just-in-time systems to ensure that supply of products to the food store takes
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