Question

Could you explain for me the roel management accounting plays in planning, control and decision-making?

thanks a lot!

Answer 1

Management Accounting is an integral part of Career in Corporate world. A Management accounting subject helps in understanding costs which helps in Strategic cost management. An organization today wants to win in market compared to competitors. A strategic cost management helps in attaining market leadership. Management accounting helps in taking managerial decisions on operational aspects as well as strategic aspects.

Role played by Management accounting in planning, controlling and decision making is as follows

• It helps in budgeting and controlling the costs. Flexible budgets are the useful tool used in organization for planning and controlling costs.
• It helps in customer and product profitability evaluation through techniques like ABC costing and Activity based management
• It helps in cost volume profit analysis and understanding profitability at different levels of activity or production
• It helps in setting standard costs at the beginning of the year and controls them throughout the year by variance analysis. Variance analysis is comparison of actual amount incurred with standard cost allowed
• It helps in various decision making like make vs. buy, shutdown vs. continue, evaluation of special orders, optimal profitability, product mix , pricing etc
• It helps in launching new products and evaluation of investments through techniques like break even analysis, relevant costs analysis,
• It helps in specific cost management like Quality costs through Total quality cost reports
• It helps in Cost management through cost control and cost reduction techniques