Theories Explaining the Origin of Managerial Accounting - Coursework Example

The paper 'Theories Explaining the Origin of Managerial Accounting" is a great example of finance and accounting coursework. Many organizations in the 21st century are increasingly paying attention to managerial accounting as well as financial accounting. Managerial accounting generally refers to the process of determining, measuring, evaluating, and interpreting accounting information in order to achieve organizational goals and objectives (Kaplan and Atkinson, 2015). Managerial accounting is different from financial accounting in that the former is all about giving information that can help in decision making and controlling organizational activities while the later latter is about availing financial statement, and reports, especially for external use. Therefore, managerial accounting plays an important role in an organization as it helps in providing information that is used for decision making and planning. The paper, therefore on process costing, which is one of the main elements of managerial accounting.

The paper starts by summarizing an article by Rosemarie Kelly on process costing and articulating the accounting keywords that are contained in the article. The summarization of Kelly’s article is followed by a theoretical discussion on the accounting concept of process costing, where the topic is discussed into details. In order to fully understand the concept of process costing, a proposed small company will be used to illustrate the costing elements of the topic. Finally, the paper will discuss the outcome of process costing the United Arab Emirates (UAE). Therefore, the paper primarily discusses process costing as an element of managerial accounting.

Summary of Kelly’s Article on Process Costing

Kelly uses the article in an attempt to provide a brief but highly extensive review on process costing, with the main objecting of helping accounting learners on how to approach and answer questions related to the concept. She starts the article by summarizing the process costing and goes ahead to explain the key accounting terms that are used. The description of process costing is followed by suggestions on how to answer questions during examination. In the end, Kelly uses examples to illustrate the application of process costing methods.

According to Kelly, process costing is applied when the production and manufacturing of identical products involves one or more processes (Kelly, 2014). For instance, it can be used in manufacturing products such as food and beverages, paint and chemicals. The features of process costing include: costs are piled by cost centre without any attempt to assign costs to particular batches; the accumulation of cost is based on the time period and not on a particular work; every department in an organization maintains process costing; and finished cost from every department finally are taken to be raw materials for subsequent units in an organization. In process costing, it is generally assumed that all materials used in manufacturing a product are inputs at the beginning of production process and the conversion cost like labor and overhead remain unchanged until the end of production (Kelly, 2014). Any product must have completed and uncompleted units. At the same time, there are some spoilt units that are associated with normal or abnormal loss. Unfortunately, some companies sell spoilt units in order to generate scrap value.