Managerial Accounting (Cost Accounting)

Introduction

Managerial Accounting (Cost Accounting) is counted among the most significant areas which tend to drive any business today. It tends to provide the information regarding the inside and outside of an organization with the adequate information for planning, decision making and thus enabling the greater control of the resources. Managerial Accounting intends to focus on connecting the operational processes and resources with monetary significance and hence forces the authorities in charge to take the appropriate decision. However the term Managerial

Accounting itself is very broad it tends to focus on the aspects related to external financial reporting, evaluates the performance and behavior and many other issues are associated with it. However, the primary goal of Managerial Accounting (Cost Accounting) framework is to achieve organization augmentation. It tends to cater primarily to planning and controlling functions, planning is done in the budgeting phase whereas the controlling comes much later when the mangers tend to compare the resources used versus the effect it had on the performance and growth of the company.

Use of Cost Accounting

Cost accounting tends to provide information relating to cost and income of each department within the organization and therefore due to this factor tends to separate itself from the general accounting framework which only provides information for only a specific department of the organization. A good Accounting framework generally tends to provide information regarding each and every subsector from products, process, orders, and services to jobs. However this framework increases the managerial control by providing the detail information regarding each sector. It also allows highlighting those areas which tend to act as profitable whether it be the products or the activities which has resulted in favor of the company. Similarly it will help to highlight the areas which are proving to be less profitable for the company. A good accounting framework will allow the company the luxury to fix the selling prices of the it's various products by uncovering the cost details.

Other than cost control it will also help to manage the inventory in much more effective way through various means such as EOQ, ABC Analysis, Inventory turnover ratio and various other tools. It tends to help different departments constitute the budget as per the requirements by providing the enough information; it generally is helpful to prepare the budgets such as sales budget, Budget allocated for Purchasing, and etc. Other than the above mentioned facts ...