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    Management Accounting: Nature, Scope & Its Role in Decision Making

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    DM
    Management accounting is a decision-making system that uses selective information that looks to the future. It uses techniques like cause-and-effect analysis and flexible presentation of information for internal use by an organization. The scope of management accounting includes financial accounting, cost accounting, budgeting and forecasting, reporting to management, cost control procedures, and statistical and interim reporting. It plays a role in decision-making through relevant cost analysis, activity-based costing, and make-or-buy analysis. Cost accounting focuses on statutory requirements while management accounting focuses on flexibility and decision-making.

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    Management Accounting: Nature, Scope & Its Role in Decision Making

    Uploaded by

    DM
    642 views9 pages
    Management accounting is a decision-making system that uses selective information that looks to the future. It uses techniques like cause-and-effect analysis and flexible presentation of information for internal use by an organization. The scope of management accounting includes financial accounting, cost accounting, budgeting and forecasting, reporting to management, cost control procedures, and statistical and interim reporting. It plays a role in decision-making through relevant cost analysis, activity-based costing, and make-or-buy analysis. Cost accounting focuses on statutory requirements while management accounting focuses on flexibility and decision-making.

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    A presentation outlining the basics of management accounting.

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    Management Accounting

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    Management accounting is a decision-making system that uses selective information that looks to the future. It uses techniques like cause-and-effect analysis and flexible presentation of information for internal use by an organization. The scope of management accounting includes financial accounting, cost accounting, budgeting and forecasting, reporting to management, cost control procedures, and statistical and interim reporting. It plays a role in decision-making through relevant cost analysis, activity-based costing, and make-or-buy analysis. Cost accounting focuses on statutory requirements while management accounting focuses on flexibility and decision-making.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    642 views9 pages

    Management Accounting: Nature, Scope & Its Role in Decision Making

    Uploaded by

    DM
    Management accounting is a decision-making system that uses selective information that looks to the future. It uses techniques like cause-and-effect analysis and flexible presentation of information for internal use by an organization. The scope of management accounting includes financial accounting, cost accounting, budgeting and forecasting, reporting to management, cost control procedures, and statistical and interim reporting. It plays a role in decision-making through relevant cost analysis, activity-based costing, and make-or-buy analysis. Cost accounting focuses on statutory requirements while management accounting focuses on flexibility and decision-making.

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    MANAGEMENT ACCOUNTING

    NATURE, SCOPE & ITS ROLE IN DECISION MAKING


    NATURE OF MANAGEMENT ACCOUNTING
    A decision making system
    A technique of selective nature.
    Futuristic.
    Cause and effect analysis
    Flexibility in presentation of information
    Internal use
    Purely optional
    Use of Special Techniques and concepts
    SCOPE OF MANAGEMENT ACCOUNTING
    Financial Accounting
    Cost Accounting
    Revaluation Accounting
    Budgeting and Forcasting
    Reporting to Management
    Cost Control Procedures
    Statistical Methods
    Interim Reporting
    Taxation
    Office Services
    Internal Audit
    ROLE IN DECISION MAKING

    Relevant Cost Analysis


    Activity-based Costing Techniques
    Make or Buy Analysis
    Utilizing the Data
    COST MANAGEMENT
    VS.
    ACCOUNTING ACCOUNTING
    Objective
    Scope
    Type of Data Usage
    Role
    Techniques Employed
    Database
    Principles
    COST MANAGEMENT
    VS.
    ACCOUNTING ACCOUNTING
    Statutory Requirements
    Success dependency
    Provision
    Reports
    Audit
    Status in Organization
    PRACTICAL EXAMPLE
    A shoe company has two products: A & B. From the
    information available or the year ended 31st March, 2016,
    create the Statement of Cost and Profit (Cost sheet)
    PARTICULARS A B
    Total Production (in units) 40,000 1,20,000
    Direct Material (in Rupees) 6,00,000 9,00,000
    Direct Labor (in Rupees) 3,00,000 5,40,000
    Production Overheads:
    Fixed (in Rupees) 30,000 50,000
    Variable (in Rupees/unit) 1 1
    Administrative Overheads 150% of Direct Labor
    Selling Expenses 1.50 1.50
    (in Rupees/unit)
    Selling Price (per unit) 44 28
    PRACTICAL EXAMPLE
    For the next financial year, it is expected that:
    Direct material will increase by 20%
    Selling expenses will increase to Rs.2/unit
    The selling price shall be increased to Rs.45/unit for
    A and Rs.30/unit for B.
    The total demand for A & B will be not more than
    45,000 units and 1,20,000 units respectively.
    But both the products require time on the same
    machine X which has a maximum working of 1,60,000
    hours in a year. Both A & B take 1 hour per unit on
    machine X.
    As a Management Accountant, suggest the sales mix for
    2016-17 and also the estimated profit for the same.
    THANK YOU!

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