Question

As a managerial accountant, how would you apply planning, control, and decision making methods in a manufacturing firm?

Answer 1

Business are faced with decisions in every day business, management accountant provides such input data which help business to make such decisions. Management accounting techniques help business to make decision on areas such as production, purchasing, pricing and cost reduction. A managerial accountant job is to record financial information so as to aid the business in planning, control and decision making.

Planning & forecasting:- As a management accountant key information need to be provided to managers so they be able to plan and forecast. Managers of a manufacturing firm may want to know what product to be produced, what product to be focused and this is possible based on the financial information provided so to develop goals and strategies for future.No planning is possible if the manager doesn't have the financial realities/constraints or future financial outcomes which is provided by the managment accountant.

As a Management accountant planning would involves strategy, positioning and budgeting. Strategy planning is something which decides where the organisation want to go and what business it to focus. So a managerial accoutant would provide information as to how the business returns, or help in providing information the cost of a product, the operating cost and non operating cost which ultimately helps the business in planning.

So as a managerial accountant I will be using Strategy and budgeting method to help managers in planning and forecasting for the business.

Control - What being planned does not go as per plan so it is important to monitor the progress of the plan so a managerial accountant produce performance report to compare the actual vs planned. Also report such as management by exception which focus on variances on significant variances. As a managerial accountant job is to monitor cost/sales other financial strategy on a continuous basis and to see if there is not any major deviation from the planning. So as a managerial accountant the job is to ensure the financial report are accurately produced also to produce reports which help the business in monitoring its cost.

So in controlling as a managerial accountant I will produce reports monitoring the cost such as management by exception reports and to do a balance scorecard analysis.

Decision making- In a manufacturing firm a manager need to make decision as to which is the best product to produce and at what price to sell so which is not possible provided the information provided is by the management accountant related cost of manafacturing the product. A managerial accountant also perform cost analysis for product and division & such information are usually used by the managers in production decision.

As a managerial accountant I will be helping the decision making process by providing supports in areas such as costing, productino and analysis. So method may be such as Job costing, process costing and activity based costing.