Could we use managerial accounting tools to assess the profitability of an organization other than a...

Could we use managerial accounting tools to assess the profitability of an organization other than a manufacturing business, or are the topics that we are learning only related to manufacturing? If we could use these concepts in service and merchandising businesses, how would we go about doing so?

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Yes, we can use managerial accounting tools to assess the profitability of an organization other than a manufacturing business such as trading and services organizations. Trading companies utilize managerial accounting tools for their inventories, as of bugdet and forecast planning for level of inventories,days sales of inventory, inventory days, inventory turnover, working capital, in order to reach appropriate decision for prices of sales, future purchases,and profit margin. Managerial Accounting plays a vital role in this process using the planning and control systems. Long-term plans are required to be linked to the budgeting system, to produce annual budgets that support the strategies of the company. Managers may require information regarding the product costs for a range of strategic and operational purposes including controlling operations, setting prices and decisions making about the continuation of a certain product

Service companies, such as business, professional, transportation, restaurants and maintenance services, use managerial accounting for the computation of certain business functions costs. The Managerial Accounting could be used by managers to support strategic and operational decisions.

ekkarill92 answered 1 year ago

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