Managerial accounting techniques

Abstract

The purpose of this study is to review managerial accounting techniques being practiced by the manufacturing industry. In managerial accounting, in order to manage the use of provisions of accounting information, with enhanced ability of notifying themselves, before they come to a decision on the inside matter of the business, which assists their management and presentation of organize functions. It contributes to organization decision making, develop planning and performance management, and offering proficiency in monetary coverage and organizing to aid organization in the formulation and execution of its policy. It is assumed that managerial accounting executives assist the management in making good and meaningful business decisions. Comment by Lauren S: This is unclear. Who comes to the decision which assists in the management presentation of organized functions? Comment by Lauren S: All items in a list need to be parallel to emphasize that they are of equal importance (“develops…” “offers…”)

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This paper explores how current managerial accounting practices view their role in modification of organizations actions due to intense competition worldwide, information expertise and transformation in regulations has undoubtedly changed the function of managing accountants in a business. Furthermore, progress in manufacturing technologies, together with highly developed computer-aided manufacture (CAM) and computer-aided design (CAD) also give major outcome to the companies’ adaption of management accounting. Investigation in management accounting, which agrees with the provision of bookkeeping information for organization conclusion making and running control, has paid consideration individually on the features and challenges in manufacturing divisions, the service division and public group. Comment by Lauren S: Suggest “that have undoubtedly” for better flow Comment by Lauren S: Comma to set off parenthetical element that enhances the sentence (but the sentence can stand without it) Comment by Lauren S: “gives” (verb needs to agree with “progress”) Comment by Lauren S: “individual consideration to the”

 

 

To assess their procedure; manufacturing businesses employ management accounting techniques which include financial plan, variance study and breakeven study. These techniques aid manufacturing businesses to prepare, guide and manage operating overheads and to achieve productivity. It is also acknowledged that the management accounting practices play a very fundamental role for organization’s accomplishments. Comment by Lauren S: Indent Comment by Lauren S: Word choice (“in” would work better here)

These practices comprise of budget, performance valuation, data for result making; and tactical analyses are several of the technique utilized among many others manufacturing businesses. As a result of development of these new ways; the primary ideology of management accounting to a more sophisticated one that can add some value to a variety of practices. It is also believed that, by majority of the manufacturing businesses, practices like marginal costing and absorption costing, have not been privileged to a great extent. It is because restraints contained by these costing systems, because accurate method of recording overheads are not accurately provided in order to formulate good management decisions in organizations. Comment by Lauren S: Simplify to “include” Comment by Lauren S: New sentence (“These are several of the techniques utilized, among many others, in manufacturing businesses.”) Comment by Lauren S: Comma (use a semicolon to connect two closely related thoughts that are both independent clauses) Comment by Lauren S: Word missing (suggests “leads to”) Comment by Lauren S: Remove comma Comment by Lauren S: “that”

The usage of the managing accounting techniques depends on the situation on the ground, that is, the level of technological advancement, the size of the company, organizational culture and stage of the product. Strategic management is progress the position of the management accountant as a tactical associate in the institute. Performance management is mounting the performance of production decision-making and running the presentation of the business. Risk management is adding to frameworks and performance for recognizing, determining, running and reporting perils to the accomplishment of the aims of the business. Moreover, Managerial accounting is a process of recording, investigating, recognizing, and presenting financial information, which could be used within management for the judgment making, preparation, and controlling the overall business. Comment by Lauren S: Indent Comment by Lauren S: Suggest “meaning” (remove the second comma) Comment by Lauren S: This is unclear. Suggest making two separate sentences to stress each idea. Comment by Lauren S: Suggest “of the accomplishments and the aims” for better flow Comment by Lauren S: No need to capitalize this Comment by Lauren S: “control”

 

Importance of budget in managerial accounting Comment by Lauren S: Is this a heading? Bold if so?

Within an organization, the essential tool for predicting and controlling the activities is called financial plan, also known as budgeting. The resources are allocated efficiently to achieve objective and goals. (Weekes-Marshall, 2011) There are various forms of budgeting for example activity-based budgeting (ABB). It is planning of sources according to target activities and is simple to use. Comment by Lauren S: Indent Comment by Lauren S: Article needed (“the”) Comment by Lauren S: Article needed (“a”)

Its prime reason is to gather all expenses inside the process which comprise of supplies, run time, and amount of employment hours and industrialized operating cost that is to be integrated in the financial plan. The budgeting process additionally does consider numeral financial plan such as the cash and master fund. Furthermore, cash budget contain cash revenue and expenses and demonstrate the opening and closing cash position at the finishing of the budgeted time. But, master budget is a sum up budget that lay down precise objective to be accomplished. The widespread companies highly prefer the utilizing of budget on a normal foundation for continuing tactical preparation and calculating of costs. Challenges are being encountered by manufacturing businesses in company’s environment due to performance evaluation. Though, an argument has been made that due to exterior reporting meetings, the research of financial accounting information has been inclined; which do not take the price of increasing capital and labor turnover into consideration. When this kind of organization format is executed, it permits the business to stay paying attention on aims and objectives of manufacturing businesses. Comment by Lauren S: Indent Comment by Lauren S: Comma to set off parenthetical element that enhances the sentence (but the sentence can stand without it) Comment by Lauren S: Simplify to “includes” Comment by Lauren S: Simplify to “considers” Comment by Lauren S: Suggest “cash budgets contain” Comment by Lauren S: “However” (try not to start a sentence with “but”) Comment by Lauren S: Try to simplify this. Using more direct and concise language is the better way to make your point. Comment by Lauren S: Delete Comment by Lauren S: What “company’s?” Specify Comment by Lauren S: Remove comma Comment by Lauren S: “does” Comment by Lauren S: Unclear (do you mean “stop paying attention?” Comment by Lauren S: Word choice (“to”)

There is a common observation that management accounting offers related data for building strong decisions, both inside or outwardly and on a long term or short-term base. Consequently, this permits managers to distinguish the behavior of the cost prior to manufacture a solid promise or concluding decision on a definite order. Majority of the businesses used the widely accepted ways of calculating return on investment, which uses the accounting rate of return for the calculation of the cash flows on main capital plans. Companies stipulate for further practical management accountants, who are at the moment expecting to develop into part of management and ready to accept exciting challenges ahead. Comment by Lauren S: Indent Comment by Lauren S: “inside and outside” (maintain parallel structure) Comment by Lauren S: “manufacturing” Comment by Lauren S: Article of speech needed (“The majority…”)

 

Management Accounting Practices Comment by Lauren S: Format heading

These practices are intended at assisting with the building of decisions by organization. For example, some benefits of data gathered from accounting systems assist management to formulate decisions on every day, monthly, annual and long choice horizon. Additional to that, it helps the management to take decisions on the basis of a day, month, year and long range horizon. Comment by Lauren S: Indent Comment by Lauren S: “to assist” Comment by Lauren S: Suggest “In addition” for better flow (follow with comma) Comment by Lauren S: Delete (article not needed here) Comment by Lauren S: Do you mean “make decisions? Comment by Lauren S: Hyphenate (“long-range”)

This judgment has a disagreement that, manufacturing companies use the cost volume profit analysis practice. In situation of planned analysis, manufacturing analysis, analysis of competitive place, manufactured goods life cycle analysis, and analysis of strengths and weaknesses of competitors, were the systems used by all in the sample. This judgment depicts that within these companies, strategic analysis is an important management accounting practice. While, on the other hand, within the manufacturing companies, the utilization of the budgets organized annually, has been very much important, as it facilitates to aid with the planning process and manage. Management accountants must face up to the demands and challenges of more straightforwardly contributing to the decision process. (Ahmad, 2012) Comment by Lauren S: Indent Comment by Lauren S: Manufacturing companies do not want this practice utilized? Try to clarify. Try to state ideas in more direct terms to better make the point. Comment by Lauren S: Comma not needed Comment by Lauren S: Delete Comment by Lauren S: Remove comma Comment by Lauren S: Delete Comment by Lauren S: Simplify to “is important” (remove comma afterwards) Comment by Lauren S: Place period after the in-text citation

The set up of worldwide markets, the highlighting on consumer dealings and enhanced excellence of goods and services, and the improvement of manufacturing technologies all give out to boost the rank of rivalry among much business. Firms struggle on cost, excellence, pace of delivery, and consumer service. All these features of performance and measurements need pointers on through management accountants being the conventional information expert of the business and must provide these. Breakdown of this may cause in other information particular to link this space, essentially description management accountants relatively unrelated. Comment by Lauren S: Indent Comment by Lauren S: One word (“setup”) Comment by Lauren S: Suggest deleting Comment by Lauren S: “from” Comment by Lauren S: “on being” Comment by Lauren S: This is not clear. How does the breakdown relate to the unrelated information?

 

Effectiveness of Management Accounting Practices Comment by Lauren S: Format heading

It is decided that the management accounting practices used are significant to the achievement of the companies and have given organization the appropriate tools to make sound business decisions. The practices also made a payment to the profit maximization and income on shareholders’ dealings. Moreover, information needed decision making and approving the finest practice appropriate for the production has contributed towards the success of the overall business, depending on the nature of the business. Management accounting practices of manufacturing businesses are mostly very flourishing as it aid with the controlling of costs and helps the business to reach its goals. However, there were also some of the challenges that were encountered with the application and use of some management accounting practices like inaccurate information and timeliness; a major challenge. Moreover, from a vendor or the business side, misinterpretation of data is also considered a challenge. The realistic role of managerial accounting is to boost understanding inside an organization and consequently diminish the peril connected with taking decisions. Accountants organize reports on the cost of producing goods, expenditures related to employee teaching programs, and the price of marketing programs, between other activities. These kinds of reports are used by managers to gauge the differentiation, or “variance,” connecting what they intended and what they in fact accomplished, or to evaluate performance to other yardstick. Comment by Lauren S: Indent Comment by Lauren S: Pluralize (“organizations”) Comment by Lauren S: Word missing (“needed for”) Comment by Lauren S: “mostly flourish as they aid” Comment by Lauren S: “boosts” Comment by Lauren S: Remove comma Comment by Lauren S: Pluralize (“yardsticks”)

Moreover, producing schedule reports, organization accountants also generate special reports for various other managers that facilitate them to take decisions about planned projects or problems that arise. Special reports are over and over again produced to examine the affiliation between costs and benefits related to diverse alternative in the decision-making process. For case in point, if a company’s opponent drops its price, management might request the accounting department to construct a report measure up to possible competitive answers, such as inferior prices, mounting advertising or even altering its product or services. Comment by Lauren S: Indent Comment by Lauren S: Word missing (suggest “when producing”) Comment by Lauren S: Simplify to “repeatedly” Comment by Lauren S: Article needed (“the case in point”)

Changes in Skills Required by Management Accountants Comment by Lauren S: Format heading

To identify what the skills are needed presently and what will be the need of anticipated skills in the future. Some of the identified current skills were arithmetical, interpretative, logical, computational, and monetary information system design. Similarly, some of the future identified skills were more progressive, like settle in management accounting technologies to innovative structures of manufacturing process, by means of modern information technology in running managerial change, by means of a deeper understanding of managerial structuring, functioning and procedures, sponsoring and innovation. Comment by Lauren S: Indent Comment by Lauren S: Delete Comment by Lauren S: Incomplete sentence (what happens after identifying these skills?) Comment by Lauren S: Run-on sentence. Separate into shorter sentences.

According to a research, the present most important function of management accounting is reporting and information provision pursued by policy, decision making, forecasting and development and budgeting. The prospect purposes of management accounting were measured to be policy making, decision making, forecasting and development pursued by reporting and data provision. Performance measurement is also critical. For this reason, the two key functions of the organization accountant of the prospect emerged to be gaining information and arranging in policy and preparation. This confirms that research emphasis on each is modifying. (Abdel-Kader, 2006). Comment by Lauren S: Indent Comment by Lauren S: “gain” Comment by Lauren S: Place period after the citations

Therefore, existing and future actions concerned with being a management accountant. The management accountants did not use types of management accounting practices traditionally relevant to costing. Some of the tools were very less used such as Variable Costing, CVP and Residual, which are some of the examples of monetary tools. Furthermore, tools like contemporary pricing tools that includes target costing and life cycle costing had not been able to get the approval of usage from multiple manufacturers. The major emphasis is indicated on budgeting and strategy. (Senftlechner, 2015) Comment by Lauren S: What do these existing and future actions accomplish? Try to complete the thought. Comment by Lauren S: Period after citation

 

Conclusion

The main focus of this research paper is to observe and examine the management accounting and its practices.

Business supposed that management accounting and its practices allow management to obtain all the relevant information for meaningful decision making. (Zawawi, 2008) . This study made a conclusion, that budgeting is being used like a control tool along with the process of planning and also for cash flow monitoring. The study also believes that, the most of the management accounting practices were being very widely used. It is also concluded that no advanced management accounting software is being used for the generation of the information but instead normal accounting software are being used widely. It is also believed that multiple factors such as effectiveness, technology, information needs, timeliness, and adoption of best possible practices were some of the very important and significant factors that have a great influence on the sample for choosing the management accounting practices. It is also believed that the respondents supposed that mostly the management accounting practices implemented inside the three entities is extremely effective and also it contributes to the success of these entities. Management accounting practices were found to be very standardized and consistent all across the group. (Shields, 2015)

The study also has multiple consequences, which very evidently shows that, those mostly management accountants believes their role as a changing one. There is much of an emphasis being put on decision-making and planning related roles, rather than the relatively more long-established areas like financial analysis and costing. The one conventional area to continue high on the record of vital areas for management accounting is budgeting. Regardless of the management accounting practices are in the same speed with operations management procedures; additional study is required to do the accepted thing for different practices for example target costing, value-based management. This research is thought to put in to our consideration on the management accounting by providing the characteristic of management accounting put into practice and procedure management study.

 

Reference:

Abdel-Kader, M. (2006). IFAC’s Conception of the Evolution of Management Accounting: A Research Note. 229.

Abdel-Kader, M. (2006). Management accounting practices in the British food and drinks industry. 256.

Ahmad, K. (2012). THE USE OF MANAGEMENT ACCOUNTING PRACTICES IN. Management accounting overview , 365.

Forsaith, D. (2018). THE FUTURE OF MANAGEMENT ACCOUNTING:. 20.

Harris, J. (2010). DIRECTIONS IN MANAGEMENT ACCOUNTING RESEARCH: AN ANALYSIS OF. 21.

Hiebl, M. R. (2013). The changing role of management accounting in the transition from a family business to a non‐family business. 119.

Journal of MANAGEMENT ACCOUNTING Research. (2016). 11.

Senftlechner, D. (2015). Management accounting and management control in family businesses: Past accomplishments and future opportunities. 570.

Shields, Michael. (2015). Established Management Accounting Knowledge. Journal of Management Accounting Research. 27.

Weekes-Marshall, D. (2011). An Exploratory Study of Management Accounting Practices in Manufacturing. International Journal of Business and Social Science , 10.

Zawawi, N. H. (2008). Research in management accounting. innovations: an overview of its development , 58.

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