Management Accounting- Preface Management accounting is the process of identifying, measuring, analysing, interpreting, and communicating information following the goals of the organisation. It also includes the strategic planning of the business. The role of management accounting is very different in today s world. Management accountants serve as internal business consultants, with the cross-functional relationship of the managers from all areas of the organization. A management accountant plays a vital role to create value for the organisation by managing resources, activities, and people to achieve the goals. The top management i.e. owners, directors set the goals of them organisation with the help of managers. To fulfill that, an organisation acquires resources, hires people, and then engages it in a pre-determined set of activities. It is up to the management team to make the best use of the organisation s resources, activities, and people in achieving the organisation s goals. The day-today work of the management team comprises four activities Decision making Planning Directing operational activities Controlling. The process of management accounting adds increase value of an organisation by following five major objectives 1. Provides information for decision making and planning 2. Assist managers in directing and controlling operational activities. 3. Motivate mangers to achieve organisation s goals. 4. Performance measurement with budgetary control and or standard costing . 5. Evaluate the competitive position in the industry in pursuance to strategic planning. Now a days, management accounting analysis is considered so crucial in managing an enterprise that in most cases managerial accountants are integral members of the management team. In the present days competitive business environment only the management accountant can contribute to its value addition process by applying the concept of balance scorecard.
Basic Concept 1. What is cost cost accounting Answer Cost is measurement, in monetary terms, of the amount of resources used for the purpose of production of goods or rendering services. Cost accounting is the application of accounting and costing principles, methods and techniques in the ascertainment of costs and the analysis of savings and or excess as compared with previous experience or with standards. CIMA defines Cost Accounting as the establishment of budgets, standard costs and actual costs of operations, processes, activities or products, and the analysis of variances, profitability or the social use of funds.
2. How prepare a Cost Sheet According to CAS 4 Name of the Manufacture Address of the Manufacturer Registration No. of Manufacturer Description of product costively consumed Excise Traffic Heading Statement of Cost of Production manufactured to be manufactured during the period