Question

briefly explain the main research paradigms in management accounting. Why do you think there are many different apporaches to research in management accounting ? Justify your position.

Answer 1

MANAGEMENT ACCOUNTING

? What is management accounting

Management accounting is the process of recording managerial activities of an organization. In otherwords, Management accounting is the presentation of accounting information inorder to develope/formulate rules and policies to be adopted by the management and also assists in the day-to-day operations of business. Management accounting helps in decision making ,since it is futuristic.

? Management accounting research

Accounting research is the process in which , the effects of economic events on the process of accounting , use of accounting by individual, government and organizations etc, are to be examined. Accounting research includes broad range of research areas including financial accounting, auditing, taxation and managerial accounting.

Management accounting ,otherwise called as managerial accounting research serve as a vehicle for publishing the actual research paper/ scientific work. Such scholarly works or papers are obtained through, experiments, field visits, survey or any other empirical methods. Such management accounting research helps the organization in the fields of :

• productivity
• sales trend
• financial planning
• helping forecast the future
• analyzing the rate of return
• make or buy decisions.

? Approaches to management accounting research

As a manager of the organization, we can findout different approaches to the managerial accounting research; they are: Comprehensive approaches includes, mainly two categories, such as:

Traditional approach:

• standard costing
• normal costing

Advanced approach :

• activity based costing
• resource consumption accounting
• zero based budgeting
• business process re-engineering

Let us look these  approaches in detail :

Traditional management accounting system will focuses on the cost and cost cotrol, variance analysis and also includes evaluating the forecast outcomes with real outcomes. It includes activities like:

* cost analysis, *cost control , * budget preparation, *investment appraisal etc.

• standard costing : it is the costing method used to compare the standard cost and revenues with actual the actual costs, inorder to arrive at the variances along with the causes of such variance.
• normal costing is the costing method, used to value the manufactured products with the actual material , labour and manufacturing overhead costs based on the predetermined manufacturing overhead rate. These costs are used for the calculation of cost of goods sold & inventory valuation.

Modern/ advanced approach to management accounting helps the organization as whole to develope the innovative capacity of business and flexibility, so that it can change easily according to the situations and also can improve the performances in financial areas as well as in non-financial areas. They enable the management to make sound decisions to reduce cost as well as in the same time adding value to the products and services of organization along with the customer satisfaction.

• activity based costing : such methods are looking at what actually causes cost to be incurred, and also being better able to control such costs.   
• zero based budgeting : re-thinking budgets in a way that engage in prioritizing all items of expenditure along with it's justification   
• business process re-engineering : it is the process of re-thinking and re-designing business process as a means of reducing costs and improving delivery.