2. Management Accounting
Provision of info to help Mgrs & other internal users in their decision making, performance measurement, planning & control activities.
It is concerned with process of measuring, analysing, interpreting & communicating info.
While no legally required format there are several key reports, 3 of the most common are:
Cost Schedules - List various expenses involved in manufacturing units/services e.g. std cost card/ Helps with pricing decisions, calc on breakeven, key factor analysis & Investor appraisal.
Budget - Planned Rev/cost based on cost schedule. Useful for several reason CRUMPET
CO-ORDINATION - Provides guidance & ensure all working together for good of company.
RESPONSIBILITY - Authorizes mgrs to make expenditure, hire staff & follow plans in OB.
UTILISATION - Helps mgrs get best out of business resources in coming period.
MOTIVATION - Useful tool for influencing & motivating mgrs to perform in line with objectives,
PLANNING - Force mgrs to look ahead. Help identify threats/opportunities. Take action in advance.
EVALUATION - Used as basis for mgmt appraisal.
TELLING - Communication ensures all members know what is expected of them.
Draw back - Only estimate means have to report on variance. Once variance established decisons can be made on what if any control measures might be appropriate to:
Prevent adverse variance repeating again
Repeat a favorable variance
Bring actual results back on track
Diff between Mgmt acc & Fin Acc