Managerial Accounting Practices

In: Business and Management

Submitted By Farishf
Words 1129
Pages 5
Management and budgeting go hand in hand through all phases of an organizations business day and it does not matter how large or small the business entity is. Working through the confines of an entities budget can be mentally exhausting and the scenarios given below offer no exception to this rule. In today’s assignment we have the task working through two different scenarios in responding to received emails.
To Andrew President of the new South –East Division;
Congratulations on your new position of our electrical components division, I understand your concern about the out of control sales costs, I know that you are only two months into the project and sometimes there are unforeseen start up costs, and then there is the separation of needs versus wants considerations of your budget. As you are probably aware of this separation process is helpful in staying within the confines of your budget, for instance is your budget out of control because of purchasing new equipment instead of maximizing the usage from the older equipment, or perhaps your overtime man-hours are in excess of the allotted budget, if this is the case perhaps this area should be scrutinized for maximum efficiency. Remember the purpose of the budget is to help define what expenses are acceptable, and what funds to allocate to each area of the project, in order to perform this correctly you need to figure out how much money can be spent on the man-hours and still be able to meet the necessary utilities and maintenance, and still have money to efficiently produce the materials needed to manufacture your electrical components. (Davis Service Group, 2013, p. 1)
The advantages of working within your budget allows you to keep track of all expenses as they occur without overspending on unnecessary items, a major disadvantage of working with a budget however is that it does not allow for unexpected…...

Similar Documents

Managerial Accounting

...|Name of Course |Managerial Accounting | |Course Code |EBF 2043 | |Credit hours |3 | |Prerequisite |Accounting | |Synopsis |The course introduces the vital role played by management accounting and the information provided by management accounting information | | |systems (MAIS) in a firm or an organisation. Management accounting is used for decision making, learning, planning and controlling | | |activities that are supporting operational and strategic needs. It also supports continuous learning and improvement activities and | | |serves as a linkage between strategy and execution of that strategy. | |Learning outcomes |At the end of this course, students are able to: | | |Compare and explain......

Words: 2279 - Pages: 10

Managerial Accounting

...Running head: Phase 1 Individual Project Phase 1 Individual Project Theoda Sanders Jr. ACC350-1204B-01 Managerial Accounting Practices Instructor: Alice Sineath 26 November 2012 The functional goal of managerial accounting should be and is for business managers to a very clear snapshot picture of a company or business financial and statistical information. In turn this enables them to be more inform on how to properly do their job. The accounting system is the major information system in almost every company and it should provide information to three detrimental areas for varies important usage: 1. Internal reporting in which a manager uses to plan and control a company daily business functions. 2. Secondly, internal reporting helps to create future planning of different policies for a company 3. External reporting to all stock investors of the company, government, some interested outside entities, tax collecting or all used to make business decisions by people that are investors in the company. Accounting is the heart of any company and make or break it. Today the cost to be the boss or should correctly say cost analysis for business or company successful operation is called the management accounting. It covers the information of the company and what’s the accountant role is. The person that really governs the manager’s precise decision making is a management accountant. Their job is to breakdown and put together the......

Words: 621 - Pages: 3

Managerial Accounting

...Managerial Accounting 1. Explain why transfer prices based on total actual costs are not appropriate as the basis for divisional performance measurement. * Transfer prices should not be based on actual costs, because such a practice would allow an inefficient producing division to pass its excess production costs on to the buying division in the transfer price. The actual cost as the basis for transfer price is not appropriate as it leads to unfair assessment of the performance of the divisions. 2. Using the market price as the transfer price, determine the contribution margins for both the Mining division and Metals division | Mining | Metals Division | Sales Price | $90 | $150 | Less Variable costs | - | - | Transfer price | - | $90 | Direct Material | $12 | $6 | Direct Labor | $16 | $20 | Variable Manufacturing Overhead | $24 | $10 | Variable Selling costs | $5 | - | Contribution Margin | $33 | $24 | 3. If Provo Consolidated Resources Company were to institute the use of negotiated transfer prices and allow divisions to buy and sell on the open market, determine the price range for toldine that would be acceptable to both the Mining Division and the Metals Division. Explain your answer * The upper limit : $90 – $5 = $85 * The lower limit : $60+$12(margin 20%) = $72 4. Use the general transfer pricing......

Words: 328 - Pages: 2

Managerial Accounting

...Management accounting is concerned with the provision and use of accounting information to managers within organizations, to facilitate the managers in their decision making and management control functions. Unlike financial accounting information (which, for the most part, is made publicly available), management accounting information is used within an organization and is usually confidential. (Jiambalvo) The distinction between traditional and innovative management accounting practices can be illustrated by reference to cost control techniques. Traditionally, management accountants’ principal cost control technique was variance analysis, which is a systematic approach to the comparison of the actual and budgeted costs of the raw materials and labor used during a production period. While some form of variance analysis is still used by most manufacturing firms, it nowadays tends to be used in conjunction with innovative techniques such as lifecycle costing and activity-based costing, which are designed with specific aspects of the modern business environment in mind. Lifecycle costing recognizes that managers’ ability to influence the cost of manufacturing a product is at its greatest when the product is still at the design stage of its product lifecycle (i.e., before the design has been finalised and production commenced), since small changes to the product design may lead to significant savings in the cost of manufacturing the product. Activity-based costing recognizes......

Words: 374 - Pages: 2

Managerial Accounting

...ACC 122 Career Paper Managerial Accounting Managerial Accounting, also known as Cost Accounting, is defined as: “A branch of accounting that observes and calculates the actual costs of a company’s operations. It is the process of identifying, measuring, analyzing, interpreting, and communicating information in the pursuit of a company’s business goals. “ Farlex Financial Dictionary. (2012). Retrieved from: Managerial accountants provide information to managers within a company. The managers then use the information to make decisions, prepare external reports, and budgets. They make decisions by analyzing the statements to evaluate performance and control costs in the most efficient way possible to meet the company’s goal. Managerial accountants must have a bachelor’s degree, in some places a master’s degree, and in some states be a CPA. Once a person becomes a managerial accountant they can work in an office or from home depending on the employer. With the rise in globalization, the need for managerial accountants familiar with international finance is also on the rise. Managerial accounting should not be confused with financial accounting as there are many differences between the two, outlined in the following table: Financial Accounting Managerial Accounting Must be accurate and timely Usually approximate but relevant & flexible Is compulsory under company law Except for few industries...

Words: 433 - Pages: 2

Managerial Accounting

...THE ACCOUNTING REVIEW Vol. 88, No. 2 2013 pp. 463–498 American Accounting Association DOI: 10.2308/accr-50318 Managerial Ability and Earnings Quality Peter R. Demerjian Emory University Baruch Lev New York University Melissa F. Lewis University of Utah Sarah E. McVay University of Washington ABSTRACT: We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations. The results are consistent with the premise that managers can and do impact the quality of the judgments and estimates used to form earnings. Keywords: managerial ability; managerial efficiency; earnings quality; accruals quality. Data Availability: Data are publicly available from the sources identified in the text. I. INTRODUCTION W e examine the relation between managerial ability and earnings quality. We anticipate that superior managers are more knowledgeable of their business, leading to better judgments and estimates and, thus, higher quality earnings.1 Alternatively, the benefit We thank two anonymous reviewers, Asher Curtis, Patty Dechow, Ilia Dichev, Weili Ge, Marlene Plumlee, Phil Shane, Terry Shevlin, Wayne Thomas (editor), Ben Whipple, and workshop participants at the 2010 Kapnick Accounting......

Words: 18713 - Pages: 75

Managerial Accounting

...MANAGERIAL ACCOUNTING SOMNATH DAS BASICS OF MANAGERIAL ACCOUNTING Purpose of the course - familiarize you with: 1. Managerial accounting concepts. 2. Managerial accounting practices. 3. Use of managerial accounting information for decision making. 4. Pitfalls. Accounting is a branch of study concerned with the generation ( identification & measurement ) and provision (Communication) of information. Managerial accounting is in particular accounting for the internal management of organizations. A. Financial versus Managerial Accounting Financial Accounting Management Accounting Approach ! unifying concept: assets=equities ! no underlying unity-- many approaches Rules ! G.A.A.P. ! no general principles ! mandatory ! mostly optional Measurement ! almost exclusively $ ! many non-financial elements ! emphasis on precision, objectivity ! subjective estimates Past/Future ! based on past ! many future estimates and forecasts Aggregation ! overall summary of business ! very segmented ! general purpose information ! specific purpose reports Frequency ! less/mandatory frequency ! more frequent and optional Similarity ! basic data source same End result ! ends with financial statements ! integral part of other business aspects B. Cost Accounting Terminology 1. Nature of Cost Cost - A sacrifice of......

Words: 2563 - Pages: 11

How Do Managerial Accounting Practices Benefit Business Organization?

...1.0 Managerial Accounting Managerial accounting is a field of accounting that provides economic and financial information for managers and other internal users (Weygandt, Kimmel & Kieso, 2012). Managerial accounting is an important internal business function. Many companies use managerial accounting to record and report their internal financial information. There are differences between financial accounting and managerial accounting. Financial accounting focuses on preparing financial reports and releasing information to the public while managerial accounting focuses on preparing financial information for internal review and decision making. Managerial accounting offers several important tools for measuring the company operational performance. Common types of managerial accounting include job costing, process costing, activity-based costing and also budgeting. 2.0 Benefits of Managerial Accounting Practices Towards Business Organization Create Competitive Advantage Management accounting can help businesses create a competitive advantage. Many business owners focus on creating consumer goods with lowest-priced and highest-quality product in the market. The ability to review financial information through managerial accounting is important in creating a financial competitive advantage. In 2010, Maxis Berhad wins excellence award in management accounting from the national award for management accounting (NAfMA). One of the winning criteria is the company ability to......

Words: 610 - Pages: 3

Managerial Accounting

...this report is a proposal to implement managerial decisions that could enable Triton Corporation to cut costs and improve on its returns. Initially Triton Corporation went into a recession but has recently emerged as a well performing company to realize the recent $15.2 million in 2014. Having a six operating divisions, Triton Corporation management have to craft decisions that will in the future ensure better performance. Organizations in the contemporary business environment have been faced with challenges pertaining to allocation of resources that are inevitably scarce. As a rationale, any business is in place to create value for the shareholders and also be in a position to comply with the going concern principle of sustainability. This company has therefore enlisted the services of an MBA intern like me to help in formulation of strategies that could steer forward the operations ensuring the past occurrences of a recession are not a repeat. The three major tasks ahead of me is to ensure proper planning of the manufacturing processes to make sure that little waste of resources is realized and secondly, come up with processes and activities that provide high value addition. The application of managerial accounting strategies in any environment are aimed at providing proper planning in all departments to ensure that decisions are well formulated and the organizational resources are utilized to the optimal. Besides, managerial accounting techniques will be sought by......

Words: 4268 - Pages: 18

Managerial Accounting

... Rev.Confirming Pages managers MANAGERIAL ACCOUNTING for Second Edition Eric W. Noreen, Ph.D., CMA Professor Emeritus University of Washington Peter C. Brewer, Ph.D., CPA Miami University—Oxford, Ohio Ray H. Garrison, D.B.A., CPA Professor Emeritus Brigham Young University nor27130_fm_i-xxviii.indd i 10/5/09 2:49:58 PM Rev.Confirming Pages Dedication To our families and to our many colleagues who use this book. MANAGERIAL ACCOUNTING FOR MANAGERS Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011, 2008 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 0 ISBN 978-0-07-352713-0 MHID 0-07-352713-0 Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim Vertovec Director of development: Ann Torbert Development editor: Emily A. Hatteberg Vice......

Words: 334319 - Pages: 1338

Managerial Accounting

...wiL1084x_fm_i-xxiv_1.indd Page i 1/10/11 7:53:00 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 Managerial Accounting John J. Wild University of Wisconsin at Madison Ken W. Shaw University of Missouri at Columbia 3 rd edition wiL1084x_fm_i-xxiv_1.indd Page ii 1/10/11 9:14:31 PM user-f499 /Users/user-f499/Desktop/Temp Work/Don't Delete Job/MHBR231:Wild:203 To my students and family, especially Kimberly, Jonathan, Stephanie, and Trevor. To my wife Linda and children, Erin, Emily, and Jacob. MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2012, 2010, 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811084-9 MHID 0-07-811084-X Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim...

Words: 10500 - Pages: 42

Accounting in Practice

...Some areas addressed by management control systems may include accounting methods, employee incentive programs and performance measurement. Accounting methods are often implemented and evaluated as part of a management control system. To control financial activities within a company, the area may be broken down into financial and managerial accounting. Financial accounting generally focuses on internal issues, such as reporting sales costs, while managerial accounting may focus on methods for determining product costs. While both areas cover business accounting issues, their methods of application generally differ, and separate systems implemented by a management control system may aid in ensuring reports remain accurate and impartial. Managerial accounting is typically responsible for providing management with information on controlling costs and improving the production process. Managerial accountants may also provide cost information on new products, make pricing decisions and monitor actual and budgetary costs. General financial accounting within management control systems aims to focus on a company's internal accounting issues. Financial accounting typically handles payroll and human resource issues affecting employees within the company. Accounts in this area may also manage employee costs and reimbursements under a control system. Management control and management accounting Management accounting and management control are closely related. Yet, they are......

Words: 1169 - Pages: 5

Managerial Accounting

...How to use various accounting methods by Maxine Barclay Managerial Accounting Kristina Unutoa, Professor Abstract Accounting is a critical part of running a business. Since there are various forms of accounting that can be used, it is important to know which technique is best to use for what companies since they are unique. Once a particular technique is established, it is also important to keep an open mind if there are changes that need to take place in the organization. Keeping an open mind helps the company adjust and move forward in a timely fashion Most businesses exist to make a profit. Accounting is an important part in helping understand how the profits and expense amounts are derived. Accounting involves the process of summation, estimation, forecasting and analysis of financial transactions. Accounting can broken up into many areas which are all slightly different in nature depending on the process and objectives. Many of the formulas, statements and mechanisms are used and the fundamentals of them are still the same (Scholasticus, 2011) . Cost accounting systems record manufacturing activities for inventory systems that update records for cost of materials, goods in process and finished product.  It must be timely information about inventory and manufacturing costs in order for management to control costs and set selling prices (Wild & Shaw, 2012).  A cost accounting system requires five parts that include an input measuring basis...

Words: 1019 - Pages: 5

Managerial Accounting Practice Exam

...Practice Exam 2 1. Short Stay Surgery uses a job costing system for all patients who have surgery. The clinic uses a normal costing system with operating hours as the allocation base. For the month of March, estimated total operating hours in the surgery suits were 3,200 hours. The estimated overhead costs for the suites were $640,000. Patient Sarah Handy was in surgery for 2.5 hours. Other costs related to Handy’s surgery include: Patient medicine $ 50 Cost of nurses 250 Cost of supplies 150 a. Determine the budgeted (i.e., estimated) overhead rate for the surgery suites. b. Determine the total costs for Handy’s surgery. c. Short Stay Surgery would like to know which of its services is more profitable so that it can emphasize that service in advertisements. Discuss whether each of the following types of information is relevant for this product emphasis decision: 1) Direct labor (doctors and nurses) 2) Direct supplies and medicine 3) Overhead 2. The Vegan Wagon is part of a chain of restaurants and has been losing money in past months. Part of the problem has been a decline in sales. However, sales are expected to pick up during the summer months. In March, for example, the loss was $2,250. Static Budget Actual Revenue $80,000 $65,000 Costs: Cost of ingredients 24,000 22,750 Serving......

Words: 608 - Pages: 3

Managerial Accounting

...(Ford and Weissbein, 1997). Yet, among all kinds of knowledge and skills, managerial skills (also known as management knowledge) are relatively more crucial but less focused (Ford and Kraiger, 1995). Managerial skills, including interpersonal and supervisory skills, are said to be transferable to different work settings while task skills are specific to individual job requirements. Research focusing on managerial skills should therefore have higher value to learning transfer literature The research register for this journal is available at This article examines a parsimonious model that specifies the effects of job involvement and career commitment on learning motivation and learning transfer, using structural equation modelling. The ``best fitting'' model is achieved because it has surpassed all the goodness-of-fit indices including the chi-square statistic. The results indicated that career commitment was positively related to learning motivation and learning transfer. In addition, suppressor effect may help to explain the non-significant relationships between job involvement and learning motivation, and between job involvement and learning transfer. Abstract Career Development International 6/1 [2001] 20±27 # MCB University Press [ISSN 1362-0436] with regard to the applicability of learning. In addition to improving job performance, upgrading managerial skills may enhance employees' employability. Management development......

Words: 6434 - Pages: 26