This research aims to evaluate and present the process of management accounting that combines data from both the internal environment and the external environment in order to generate reports as required by the different department heads. Thus the sources of data are both external and internal…
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The intention of this study is management accounting as the process of generating reports that enable managers to assess how the company is performing in relation to competitors. By contrast, financial accounting provides reports for external stakeholders such as the shareholders. Financial accounting reports are also prepared according to the generally accepted accounting principles. However such rules are not applicable to management accounting. Thus a management accountant can apply his own discretion in preparing the required report. Management accounting is defined on the basis of several assumptions. The first assumption is related to the goal of management accounting. The goal of management accounting is to assist the management in maximizing the net profit of the company. The second assumption is that the management is able to control the success of the company to some extent so that its performance is not completely dependent upon market forces. The role of management is to apply planning and control to impact upon organizational performance. Management accounting is defined based upon the assumption that it is meant to provide a set of decision making tools that the management will apply to enhance organizational performance. As mentioned before, the role of management is to apply planning and control. Planning and control can be applied in marketing, production or finance. Therefore the definition of management accounting must include decision making in marketing, production and finance. ...
As mentioned before, the role of management is to apply planning and control. Planning and control can be applied in marketing, production or finance (Lillis & Mundy, 2005). Therefore the definition of management accounting must include decision making in marketing, production and finance. Management accounting derives its definition also from the assumptions that the management makes about the accounting department. The management expects the accounting department to provide data that will assist in marketing, production and financial decision making. Finally, management accounting must be defined based upon the assumption that accounting information must be customized to the decision making tool involved. Sometimes this involves defining the nature of the accounting information according to fixed and variable costs (Emsley, 2005). Management accounting as a process must incorporate all these assumptions. The sources of management accounting data can be both external and internal. The role of management is to apply planning and control techniques in influencing the organizational performance. To meet this objective, the management must access data from both the internal environment and the external environment. Management accounting data from the internal environment enables the management to assess the organizational performance. The data from the external environment, such as the data on competitors and demand, enable the management to compare organizational performance with market performance. Thus these sources of data enable the management to understand whether the company is performing above or below the market average. As mentioned before, one of the assumptions
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(“Management Accounting Research Paper Example | Topics and Well Written Essays - 1250 words”, n.d.)
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(Management Accounting Research Paper Example | Topics and Well Written Essays - 1250 Words)
“Management Accounting Research Paper Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/management/1392894-management-accounting.
Accountability 12 Conclusion 13 Reference 15 Abstract This study represents one of the most important areas of management accounting i.e. desirability and effectiveness of accounting for management control. Accounting is the most effective device used by managers and management for organizational control.
XYZ Financial Consultants were engaged by Sprockets Ltd to evaluate their prevailing job costing system for its efficiency. It was understood that Activity Based Costing method is being considered to replace the current traditional system and that recommendations in this regard were required.
Management accounting is the accounting intended for the internal stakeholders of an organization. It helps managers to take sound decisions for the betterment of an organization. Accounts department, production department, sales department and the business processes are some of the data sources for management accounting.
It also lists the beneficiaries of this modern way of calculating costs and its application in different arena of the business. Use of cost accounting in departments of a business “Cost accounting provides the product cost data required for special reports to management (management accounting) and inventory costing in financial statements.”(Edward J.
can produce 2500 hard drives annually, its total profits could be; 2500 * $86.45 = $216,125 Total demand for Zeon hard drives – 3000 Malibu Inc. produces – 2500. Therefore, Malibu Systems Inc. will purchase 500 ZEON hard drives at $120.00 and incur selling and administrative expenses of $6.50 from Techno Products Inc.
Considering the three options option II is ideally the optimal product mix. Although the product Alice 700 provides higher contribution per unit, the profitability statement workings prove that the remaining units are to be allotted to product Alice 300 due to higher profit.
To bring down the fixed overhead cost of Component X, the only way is to increase the production. When the production goes up the fixed cost per unit comes down and this will be beneficial for the customer Division B. But we do not know whether Division B can buy the extra production.
Building Rent on the other hand is a fixed cost since its cost has to be paid no matter if the building is being used or not. This cost does not change with the level of units sold. A fixed yearly amount (usually paid at the start of the year) will have to be paid.