Managerial AccountinG - Assignment Example

Managerial Accounting Assignment By 23 March Task Communicating Theft of Finished Good The theft of finished goods is a crime by all means. The stakeholder in this case is the firm itself as the theft of goods finished not sold will bring a cost solely to the firm. This is a case of internal fraud and no matter whom the person is this need to be communicated to all concerned parties as soon as possible. An early resolution of such problems is necessary for the health and well being of the company itself.

I will communicate this to the management and then let the management handle the situation. As an accountant I do not need to take action myself and confront my friend, thus I will leave it to the management to deal with its employee and resolve the issue. However, as loyalty note on my part I will disclose all the information to the higher management even thou this is done by my dear friend because it is all about being ethical in the business. Managerial versus Financial Accounting My friend who is nowadays interested in finance and accounting came to me to understand the difference between financial and managerial accounting.

I started off by giving out the definitions to my friend. Managerial accounting, also known as cost accounting, deals with the internal reporting in an organization. It involves reports on daily or weekly basis that helps managers to make financial decisions. It is the identifying, interpreting and then exhibiting information to the managers. There is no legal binding for producing internal reports but firms do this in order to show a numeric picture of goals and objectives. “The focus of managerial accounting is on the needs of managers within the organization.

” (Hilton et al 2008) These reports are a futuristic look and include budgets and forecasting analysis. On the other hand, financial accounting is the collection of financial data to formulate financial statements. These statements are generated by the company for its stakeholders and the outside world. Every firm has a legal binding to publish its results every year. The statements generated through financial accounting are based on the historic data and include balance sheets and income statements etc.

Through these differences I was able to explain the basic differences between the two branches of accounting: managerial and financial. Task 2 The allocation of overhead costs is an important decision for managers. The use of direct labour hour gives managers the advantage to track down the exact costs based on the hours used. It is simpler to compute and gives a direct result. However a disadvantage of such system is that a slack in activity would result in an increase in labour hours thus increasing the overall costs.

Managers need to evaluate the labour hours with full scrutiny in order to come up with accurate calculations. Reference: Hilton et al (2008). Managerial Accounting – creating value in a dynamic business environment. NY: Mc Graw Hill.