Question

A student planning a career in management wondered why it was important to learn cost and management accounting. How would you respond? Give some examples to support your point of view.

Answer 1

Solution. A student planning to have a career in management needs to specialize in any one of the different available subjects such as finance, marketing, operations, etcetera but need to develop general level knowledge in every subject applicable in business/company.

importance of cost and management accounting for a student planning a career in management is needed for following reasons:

1.The first step for a manager is to determine and plan for meeting company's objectives. A general objective can be assumed to meet profit along with social impact in society. For maintaining profit, a manager needs to determine costs to be incurred for the operations of business to get an idea for revenue, accordingly he/she can make/take necessary steps to manage the cost of its operation. This process is known as preparation of budget. Preparation of budget includes cost and management accounting. This encompasses costs, revenues, net profit, etcetera calculation during an accounting period. For instance, a manager needs to supervise and review the financial reports reported by accountants showing company's activities.

2.Cost and management accounting helps a manager in decision making process. It represents to the manager the information regarding inventory valuation by applying inventory valuation method most applicable for the company. It facilitates in decision making process by providing information by applying different techniques of accounting. A manager needs to have such knowledge to interpret financial reports made by the accountants for formulating policies and controlling. For instance, a manager needs to know how to interpret financial reports on inventory valuation as it will help in getting loans for a company affects a company's assets position.