In: Accounting
The topic will be "Are Different Methods of Accounting for Variable Cost Necessary?"
Managerial accounting is quite different from financial
accounting. External reporting rules are
replaced by internal specifications as to how data are to be
accumulated and presented. Hopefully, these internal specifications
are sufficiently logical that they enable good economic decision
making. For example, specific reporting periods may be replaced
with access to real-time data that enable quick responses to
changing conditions. And, forecasted outcomes become more critical
for planning purposes. Likewise, cost information should be
disseminated in a way that managers can
focus on (and be held accountable for!) those business components
(“segments”) under their locus of control.A business must plan for
success. What does it mean to plan? It is about thinking ahead --
to decide on a course of action to reach desired outcomes. Planning
must occur at all levels. First, it occurs at the high level of
setting strategy. It then moves to broad-based thought about how to
establish an optimum “position” to maximize the potential for
realization of goals. Finally, planning must be
undertaken from the perspective of thoughtful consideration of
financial realities/constraints and anticipated monetary outcomes
(budgets).