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Management Accounting and The Business Environment - Coggle Diagram
Management Accounting and The Business Environment
About
Management and Cost Accounting
is a business function that involves:
Collecting, analysing and reporting
financial information
To
help managers make informed decisions
about resource allocation and cost control
Three Stages of CMA
Decision Making
Chooses the
best path towards realizing those objectives,
considering various options
Control
Involves
regular feedback
to determine if
objectives were met
after taking necessary actions
Planning
Sets
business
direction and objectives
, with s
hort or long-term goals
Comparison of Management Accounting, Financial Accounting, and Cost Accounting
Demographics
Financial
Used by shareholders, creditors and other external parties to review the company's performance
Cost
Used by internal management and throughout the business
Management
Used by management within the company to base decisions on
Availability
Financial
Publicly reported information if company is listed
Cost
Confidential and used by management
Management
Confidential and use by management
Basis
Financial
Focus on the actual financial info to gain information on the performance of the company
Cost
Focus on both past and present cost of the products to control these within the company
Management
Looks at financial and non-financial info to determine a forecast for the future
Constriction
Financial
Financial Statements compiled on IFRS Basis
Cost
Reports and information is prepared based on the needs of the user
Management
Reports and infomation is prepared based on the needs of the user
Area
Financial
Historical focus on reporting past transactions and results
Cost
Narrow focus on calculating costs, cost control and cost reduction
Management
Broad, forward-looking, focus on supporting future decisions
Role of Management Accounting in an organisation
Expanding and changing role of Management Accounting
Rapid Development and Technology
Management accountants are
expected to use a wide range of technology tools
and
software
Increased Size
of Companies
Increased need for management accountants to
use technology to collect and analyse data
Worldwide Competition
Increased Complexity
Management accountants need to
provide comprehensive and easy-to-understand
financial information
Financial information is
used to support decision-making at all levels
of the organisation
Regulatory Environment
Management accountants responsible for
ensuring compliance with regulations
need to
have a deep understanding financial reporting
and
auditing practices
Increased Emphasis on Quality
Need to
analyse data and identify patterns
and
trends to improve overall quality
Management accountants responsible for
providing accurate, reliable and relevant financial information
Requires a
deep understanding of organisation
and its operations
Globalisation and International Competition
Implications for Management Accounting
Management Accountants can
provide valuable information and analysis for strategic decision-making
Effective performance management systems
are
needed
to compete in a global market
Companies need to focus on
cost management remain competitive
Defining costing and the Purpose thereof
What is Costing
There different
factors to consider when calculating the cost
of a product.
And whether
to calculate the cost at the time of production or sale
Such as the
cost to make it
versus the
cost to the customer
Costing system is
a set of processes, controls, and reports
that a company
uses to record, classify, and allocate costs
to its different elements
Is not just about finding the cost of a product, its
about assigning costs to any element of a business
What is the purpose of Costing
To Price Products
To Value Inventory
To Control Costs
To Aid Decision Making
To Record Costs