Name: Julia Marie Alcover Teacher: Mrs.

Marichu Fornolles
Course: BSACT 3 Subject: AC 515

Overview of Management Accounting

Management Accounting is the process of preparing management reports and accounts that provide
accurate and timely financial and statistical information required by managers to make day-to-day and
short-term decisions.

Unlike financial accounting, which produces annual reports mainly for external stakeholders,
management accounting generates monthly or weekly reports for an organization's internal audiences
such as department managers and the chief executive officer. These reports typically show the amount
of available cash, sales revenue generated, amount of orders in hand, state of accounts payable and
accounts receivable, outstanding debts, raw material and inventory, and may also include trend charts,
variance analysis, and other statistics. Management Accounting provides information that is tailored to
meet the specific needs of a company's management.

Applications of Management Accounting include:

• Classifying various cost elements especially those related to the manufacturing process and
including them in financial statements
• Relatively determine the cost of a specific product or service,
• Predicting the behaviors of cost for various levels of production, assessing cost-volume-profit
dependencies.
• Analyzing changes in operating income
• Preparation of budgets for the future
• Evaluating incurred manufacturing cost by comparing actual and expected results
• Evaluating decentralized operations by comparing actual vs. budgeted costs and computing
numerous measures of profitability
• Gauge special decision making situations by comparing differential revenues and costs
• Evaluating other proposals for long-term investments in fixed assets
• Evaluate the adverse effect of cost allocation on prices of goods and services
• Planning of operations using just-in-time concepts.

References:

http://www.businessdictionary.com/definition/management-accounting.html
Managerial Accounting : 12th Ed. Warren,C.S,Reeve,J.M, Duchac,J.E