1. Define managerial accounting 2. Describe the role of managerial accounting an
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Question
1. Define managerial accounting
2. Describe the role of managerial accounting and the management accountant in a business or organization
3. Describes ethical issues/concerns for the management accountant
4. Describes at least three managerial accounting techniques available and their application within a business or organization
Part II Select at least three of the five topics identified below:
Cost Management Techniques
Costing Methods
Capital Investment Decision Techniques
Budgeting
Quality Control
For each topic selected, present real world examples of the application of managerial accounting techniques within a business or organization. Examples may be gathered from your own professional experiences or from case studies obtained from credible sources (excluding textbook examples explored in previous weeks). Presentation of each example should include how a managerial accounting technique was applied in the business or organization’s decision-making model. Be sure to support your example with calculations when applicable.
Explanation / Answer
1. Definition of 'Managerial Accounting' The process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. This is also known as "cost accounting."
2. The Role of Management Accounting in the Organization
The purpose of management accounting in the organization is to support competitive decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategy. The interesting thing about management accounting is that it is rare to find an individual within a company with the title of “management accountant.”
Managerial accountant's role in the organization.
Managerial accountants record financial information for their companies that is used by the organization’s management team to aid in the decision-making process. Managerial accountants develop budgets, perform asset and cost management, and create important reports used by the management team. Managers depend greatly on the information provided by managerial accountants to develop effective business strategies. Small business owners make most of the decisions within their company. The information presented by managerial accountants affects the owner’s ability to make sound business decisions.
3. Ethical issues/concerns for the management accountant.
a. Ethical Responsibility
The growing prevalence of CSR within the corporate environment has heightened many managers' awareness of ethical issues and of their responsibility to be conversant with them and able to make proper decisions.
b.Discrimination
Questions of discrimination are common in the workplace, and managers are often called upon to deal with them. Historical discrimination on the basis of race, ethnic origin, gender or sexual orientation has made many individuals sensitive to these problems.
c.Fraud
Fraud is a serious ethical breach in the workplace. A manager who is made aware of fraudulent activities within the workplace is ethically required to report this to the relevant authorities.
4. a. Variance alaysis
systematic approach to the comparison of the actual and budgeted costs of the raw materials and labour used during a production period
b.Activity Based Costing (ABC)
Which recognizes that, in modern factories, most manufacturing costs are determined by the amount of 'activities'
c. Resource consumption accounting
Part II
1. Cost Management Techniques
Cost Management is the application of cost management techniques that simultaneously improve the strategic position of a firm and reduce costs.
Techniques.
(i) Budgetary control
(ii) Standard costing
(iii) Variance Analysis
(iv) Ratio Analysis
For example, if the standard material input for a unit of production is Rs. 500 and the actual cost is Rs 475 then the variance of Rs. (-) 25 is the measure of performance, which shows that the actual performance is an improvement over the standard.
2. Costing Methods
Costing methods are accounting techniques that are used to help understand the value of inputs and outputs in a production process. By tracking and categorizing this information according to a rigorous accounting system, corporate management can determine with a high degree of accuracy the cost per unit of production and other key performance indicators.
The following are different cost accounting approaches:
There are four accepted methods of costing inventory items:
3. Budgeting
Budgeting is an important component of financial success. It's not difficult to implement, and it's not just for people with limited funds.The word "budget", just call it by a different name, such as "personal financial planning." That's what budgeting is, after all. It's a proactive approach, rather than a reactive approach, to managing your money.
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