Question

1. the challenges companies face during this uncertain global health care call to action and how the managerial accounting decision-making tools can assist managers to either recalibrate or create new operational strategies

Answer 1

Managerial iaccounting i(also iknown ias icost iaccounting ior imanagement iaccounting) iis ia ibranch iof iaccounting ithat iis iconcerned iwith ithe iidentification, imeasurement, ianalysis, iand iinterpretation iof iaccounting iinformation iso ithat iit ican ibe iused ito ihelp imanagers ito imake inecessary idecisions ito iefficiently imanage ia icompany’s ioperations. iUnlike ifinancial iaccounting, iwhich iis iprimarily iconcentrated ion ithe icorrect iorganization iand ireporting iof ithe icompany’s ifinancial itransactions ito ioutsiders i(e.g., iinvestors, ilenders), imanagerial iaccounting iis ifocused ion iinternal idecision-making.

Managerial iaccountants ineed ito ianalyze ivarious ievents iand ioperational imetrics iin iorder ito itranslate idata iinto iuseful iinformation ithat ican ibe ileveraged iby ithe icompany’s imanagement iin itheir idecision-making iprocess. iThey iaim ito iprovide idetailed iinformation iregarding ithe icompany’s ioperations iby ianalyzing ieach iindividual iline iof iproducts, ioperating iactivity, ifacility, ietc.

Managerial iaccounting iis ivery ieffective iin ihighly icompetitive iand ifast-paced ibusiness ienvironments iwhere iquick idecisions ineed ito ibe imade. iThese idecisions imight ihave ito ido iwith ia isales itactic, ibudgeting ior icash iflow imanagement. iManagerial iaccounting iwill iuse ioperational idata ito imake isense iof ithe isituation iquickly.

The igoal iis ito iuse ithe ibudget ito ihelp imake ishort-term ioperational idecisions ithat iwill ihelp iincrease ithe icompany’s ioperational iefficiency.

Let’s isay ian iinternet icompany isubscribes ito icloud icomputing iservices. iMonthly iprices ito irent iout ispace iin ithe icloud ihave ibeen iincreased. iThe iinternet icompany’s imanagers ican iuse ibudgets ito isee iif ithe iprice iincreases iare icosting itoo imuch iand idecide ito ireduce icost iand iincrease ioperational iefficiencies.

Techniques iin iManagerial iAccounting

In iorder ito iachieve iits igoals, imanagerial iaccounting irelies ion ia ivariety iof idifferent itechniques, iincluding ithe ifollowing:

1. iMargin ianalysis

Margin ianalysis iis iprimarily iconcerned iwith ithe iincremental ibenefits iof iincreased iproduction. iMargin ianalysis iis ione iof ithe imost ifundamental iand iessential itechniques iin imanagerial iaccounting. iIt iincludes ithe icalculation iof ithe ibreakeven ipoint ithat idetermines ithe ioptimal isales imix ifor ithe icompany’s iproducts.

2. iConstraint ianalysis

The ianalysis iof ithe iproduction ilines iof ia ibusiness iidentifies iprincipal ibottlenecks, ithe iinefficiencies icreated iby ithese ibottlenecks, iand itheir iimpact ion ithe icompany’s iability ito igenerate irevenues iand iprofits.

3. iCapital ibudgeting

Capital ibudgeting iis iconcerned iwith ithe ianalysis iof iinformation irequired ito imake ithe inecessary idecisions irelated ito icapital iexpenditures. iIn icapital ibudgeting ianalysis, imanagerial iaccountants icalculate ithe inet ipresent ivalue i(NPV) iand ithe iinternal irate iof ireturn i(IRR) ito ihelp imanagers ito idecide ion inew icapital ibudgeting idecisions.

4. iInventory ivaluation iand iproduct icosting

Inventory ivaluation iinvolves ithe iidentification iand ianalysis iof ithe iactual icosts iassociated iwith ithe icompany’s iproducts iand iinventory. iThe iprocess igenerally iimplies ithe icalculation iand iallocation iof ioverhead icharges, ias iwell ias ithe iassessment iof ithe idirect icosts irelated ito ithe icost iof igoods isold i(COGS).

5. iTrend ianalysis iand iforecasting

Trend ianalysis iand iforecasting iare iprimarily iconcerned iwith ithe iidentification iof ipatterns iand itrends iof iproduct icosts, ias iwell ias iwith irecognition iof iunusual ivariances ifrom ithe iforecasted ivalues iand ithe ireasons ifor isuch ivariances.

The idecisions ithat ihave ito ibe imade iin iorder ito iensure ieffective iresources iallocation irequires ia ivariety iof iinformation ithat ionly imanagement iaccounting ican imake iavailable ito imanagers. iThe irole iof imanagement iaccounting ichanged iover itime, idepending ion ithe ieconomic icontext. i iOf icourse, iin ia icomplex, iturbulent iand iuncertain ienvironment, ithe imanagers iinformation ineeds iare idiversifying iand igrowing, iand imanagement iaccounting i- ias ia iprivileged isource iof iinformation ifor ithe imanagement isystem i- ican imeet ithese irequirements, iprovided ithat ipermanently iadapt iits itools iand ipractices ito ithe irequests iof idecision-makers.

i i i i i i i i i i i i i i i i i i i i i i i iA icosting isystem iis iused, ion ithe ione ihand, ifor ifinancial ireporting ineeds i(to ithe ievaluation iof ibalance isheet iitems) iand, ion ithe iother ihand, ifor ithe iinternal iinformation ineeds iregarding ithe iprocesses iimprovement, iin iorder ito ifacilitate istrategic idecisions-making, iand ioperational itoo. i iCurrently, ithe ibusiness ienvironment ibecame imore iapplicant‖ ifor ientities, iwhich iare iforced ito icompete iin ia imuch imore iaggressive iin iterms iregarding iprices, iquality iand iservices. iInformation ithat i imanagers i ineed i iregards i iissues i isuch i ias i iquality, i idelivery i itime, i ieffectiveness i iof i irunning iactivities ias iwell ias iproducts i/ iservices iand icustomers iprofitability. i iStrategic icost imanagement iis ia iconsequence iof ichanges ithat icurrently itake iplace iand irequires ia ipermanent iadaptation iof ithe itools iand itechniques iso ias ito iimprove ithe istrategic iposition iof ithe iorganizations. iFor iinformation iprovided iby imanagement iaccounting ito ibe iuseful ito imanagers, iin iorder ito iachieve ithe istrategic iobjectives iof ithe iorganization, ithe imanagement iaccounting ishould ibe i idesigned i iand i iused i iso i ias i ito i ifollow i ithe i imission i iand i ithe i icompetitive i istrategies i iof i ithe iorganizations, i iby i iconducting i ian i ianalysis i icorrelated i iwith i ithe i ieconomic i ienvironment, i icosts iassociated iwith icustomers, icompetitors, ietc. i

i i i i i i i i i i i i i i i i i i i i i i i i i i i i iGenerally, istrategic imanagement iaccounting iis iidentified iwith ia igeneric iapproach iof iaccounting ifor istrategic ipositioning. iThe istrategic inature iof imanagement iaccounting iaims iat iits iexternal iand iprospective iorientation. iStrategic i imanagement i iaccounting i ican i ibe i idefined i ias i i"a i iprocess i iof i iidentifying, i igathering, ichoosing iand i ianalyzing i iaccounting idata i ifor ihelping i ithe i imanagement iteam i ito imake i istrategic idecisions iand ito iassess iorganizational ieffectiveness"). iNormally, ithe idevelopment iand iuse iof istrategic imanagement iaccounting itechniques iis irelated ito istrategic iissues iregarding ithe iexternal iinformation ineeds iin iorder ito iface ithe iuncertainties iof ieconomic ienvironment iand ito isupport istrategic idecisions. iThis iexternal iorientation imay irelate ito icompetition i(information i iregarding ithe i icompetition iplays ia i ikey irole iin iachieving i icompetitive iadvantage), i ibusiness i ipartners i i(from i ithe i ivalue i ichain i iperspective, i ithe i iexternal i iinformation iusefulness i iexploits i ithe ilink i iwith i ithe isuppliers i iand i icustomers) iand i i/ i ior imarket i i(assumes ithe iorientation itoward ioffer iof iservices iin iorder ito imeet icustomer ineeds) i

Managerial iaccounting ireports iuse ibudget ireports ito ihelp iguide imanagers ito ioffer ibetter iemployee iincentives, icut icosts iand irenegotiate iterms iwith ivendors iand isuppliers.

1. ACCOUNT iRECEIVABLE iAGING iREPORTS

Does iyour ibusiness irely iheavily ion iextending icredit? iThen ian iaccount ireceivable iaging ireport iis ivital ito iyour ioperations. iThis ireport ibreaks idown ithe iremaining ibalances iof iyour iclients iinto ispecific itime iperiods iallows imanagers ito iidentify ithe idebtors iand iidentify iissues iin ithe icompany icollection iprocess.

If iyour icompany ihas imany idebtors, iyou imay ineed ito ia icomplete irehaul ito itighten iup icredit ipolicies ias icash iflow iis icritical ito ithe ioperations iof iany ibusiness. iA icompany ishould ialways iknow iwho iowes ithem iwhat.

2. PERFORMANCE iREPORTS

The iperformance iof ia iwhole icompany, ieach idepartment iand ieach iemployee iare iconsidered iat ithe iend iof ieach iterm iin iperformance ireports. iThese ireports iare iused ito imake iimportant idecisions iabout ithe icompany’s ifuture. iUnder-performers iare isometimes ilet igo iand iindividuals iwho iachieve ior iover-achieve itheir igoals iare irewarded ifor itheir icommitment ito ithe ibusiness. iPerformance ireports ican ishow iflaws iin iworkflow isetups iif ilet’s isay ifor iexample ia iwhole idepartment iis isomehow inot iperforming ito ia icertain icapacity. iA iperformance ireport iis ian iimportant itool ito istay ion itrack ia icompany’s imission.

3. COST iMANAGERIAL iACCOUNTING iREPORTS

Managerial iaccounting idetermines ithe icosts iof iarticles ithat iare imanufactured. iAll iraw imaterial icosts, ioverhead, ilabor iand iany iadded icosts iare iconsidered, iand ithose itotals iare idivided iby ithe iamounts iof iproducts iproduced.

A icost ireport ioffers ia isummary iof ithis iinformation. iThis ireport ioffers ishowcases ithe icost iprices iof iitems iversus itheir iselling iprices ifor imanagers. iUsing ithese ireports, iprofit imargins iare iestimated iand imonitored.

Better ioptimization iof iresources ican ibe iachieved iby ihaving ithis iunderstanding iof iall iexpenses, iincluding iinventory iwaste, ihourly ilabor icosts, iand ioverhead icosts.

4. OTHER iMANAGERIAL iACCOUNTING iREPORTS

Other imanagerial ireports ithat iare ivital ito ievery ibusiness iinclude iorder iinformation ireports, iproject ireports, icompetitor ianalysis iand imany iother isimilar ireports.

These ireports iare ieither icreated iinternally ior ioutsourced ithrough iprofessionals idepending iupon iyour icompany’s icapability ito ihandle ireporting irequirements. iTo imake ithe imost iinformed idecision icompanies iand imanagers imust ihave iaccess ito iauthentic idata iand icredible imanagerial iaccounting ireports