Question

Perception"  Please respond to the following:

• You have been immersed in the world of managerial accounting (i.e., cost accounting) for seven (7) weeks. At this point in the course, what is your assessment of cost/managerial accounting from a provider perspective?
• Now imagine that you are the user, not the provider. Explain whether or not your assessments have changed, and explain why or why not. As a user, describe how you would use two (2) of the variances calculated to make better management decisions.

Answer 1

Assessment of cost/managerial accounting from a provider perspective

Managerial accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization’s goals.

1. Integral part of process: Managerial accounting is an integral part of the management process and managerial accountants are important strategic partners in an organization’s management team.

2. Creating value: The management team seeks to create value for the organization by managing resources, activities, and people to achieve the organization’s goals effectively.

3. Focus on internal personnel needs: The focus in managerial accounting is primarily on the needs of personnel within the organization.

Assessment of cost/managerial accounting from a user perspective:

1. Marketing Managers use financial information to help price products and assess their profitability. Using product cost information, marketing managers ascertain how low they can drop prices and still be profitable.

2. Production managers use financial and non financial information to manage quality and costs and to assure on-time delivery.

3. General managers use financial information to measure employee performance and create incentives for better performance.