Management Accounting

Management Accounting - Management Accounting Running head...

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Management Accounting 1 Running head: MANAGEMENT ACCOUNTING (<= 50 CHARACTERS) Management Accounting Andrea Mason ACC206: Principles of Accounting II Instructor: Katalin Ogle March 7, 2011
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Management Accounting 2 Management Accounting Management accounting assists managers in planning and controlling operations within the business. Management may use all or a part of the data pulled from management accounting to assist in making budgeting, operational, and planning decisions. Management accounting is vital to every business whether small or large. The data used in management accounting aides in financial decisions for the future as well as operational decisions. This paper will define management accounting, describe the sources of data, and determine how the data is used to make management decisions. “Management accounting provides information to help managers plan and control operations as they lead the business” (Horngren & Harrison, 2007). One aspect is managing the company’s plant. In management accounting, the company’s plant is managed by setting and determining operation and production costs. Managers use the data to determine if operation costs are too high, too low, or can be cut. Another aspect that is used is managing equipment. Equipment depreciates over time and new, more reliable and efficient equipment is developed. Management accounting aides management in deciding when equipment needs to be serviced, replaced, or upgraded. The final area management accounting assists in is managing human resources. By managing human resources, management can determine whether there is a high turnover or retention rate which links directly back to the employees in human resources. Recruiters are often the employees in human resources which this data links directly to. If a recruiter has a high turnover rate, this would be bad for the company because continually hiring new employees is costly. If a recruiter has a high retention rate, this is good for the business because it not only prevents hiring costs, but also ensures that there are experienced employees at the company. Management accounting makes planning easier for managers.
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