Cost accounting 2.doc - 1.0 Cost accounting Management accounting or managerial accounting is concerned with the provisions and use of accounting

Cost accounting 2.doc - 1.0 Cost accounting Management...

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1.0 Cost accounting Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. In contrast to financial accountancy information, management accounting information is: designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators; usually confidential and used by management, instead of publicly reported; forward-looking, instead of historical; computed by reference to the needs of managers, often using management information systems , instead of by reference to general financial accounting standards. Services provided by management accounting Listed below are the primary tasks/ services performed by management accountants. The degree of complexity relative to these activities are dependent on the experience level and abilities of any one individual. Rate & Volume Analysis Business Metrics Development Price Modeling Product Profitability Geographic vs. Industry or Client Segment Reporting Sales Management Scorecards Cost Analysis Cost Benefit Analysis Cost-Volume-Profit Analysis Life cycle cost analysis Client Profitability Analysis IT Cost Transparency Capital Budgeting Buy vs. Lease Analysis
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Strategic Planning Strategic Management Advise Internal Financial Presentation and Communication Sales and Financial Forecasting Annual Budgeting Cost Allocation In management accounting , cost accounting establishes budget and actual cost of operations, processes, departments or product and the analysis of variances, profitability or social use of funds. Managers use cost accounting to support decision-making to cut a company's costs and improve profitability . As a form of management accounting, cost accounting need not to follow standards, because its primary use is for internal managers, rather than outside users, and what to compute is instead decided pragmatically. Costs are measured in units of nominal currency by convention. Cost accounting can be viewed as translating the supply chain (the series of events in the production process that, in concert, result in a product) into financial values. Classical cost elements are: 1. raw materials 2. labor Origins Cost accounting has long been used to help managers understand the costs of running a business. Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions.
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