Question

How does managerial economics differ from managerial accounting?

Answer 1

Managerial economics is the application of economic concepts and economic analysis to the problems of formulating rational managerial decisions.

Features of managerial economics

1. It assists the managers of a firm in finding rational solutions

2. It helps in formulating logical managerial decisions.

3. It reduces the gap between economics in theory and economics in practice.

4. It helps in taking decisions relating to the firm's customers, competitors, suppliers etc

5. It makes use of statistical and analytical tools to assess economic theories in solving practical business problems.

6.It helps in decision making process of non-profit organizations.

Managerial accounting (also known as cost accounting or management accounting) is a branch of accounting that identifies, measures, analys, and interpret the accounting information so that it can be used to help managers to make necessary decisions to efficiently manage a company’s operations.

The following are the main characteristics of management accounting:

(1) Providing Financial Information

(2) Cause and Effect Analysis

(3) Use of Special Techniques and Concepts

(4) Decision Making

(5) No Fixed Conventions

(6) Achievement of Objectives

(7) Improving Efficiency

(8) Forecasting

(9) Providing of Information and not Decisions

Managerial economics depends on various economic tools to support the managerial decision making, while managerial accounting depends only on accounting information