Management Accounting
Management Accounting Checklist
The role of management accounting in performance management
Management accounting seeks to assist management performance through a process of reporting on all aspects of business activity. This will include reporting on: Sales - volumes sold, product mixes and prices Manufacturing efficiency - material usage, material prices, labour efficiency, labour rates and capacity usage Administration - overhead expenditure, departmental budgets and cash management.
The precise scope of a management accountant's work will vary from one organisation to another. In smaller organisations the financial accountant may also be responsible for the production of management reports. Two significant areas of a management accountant's responsibility will be product costing and budgetary control. Costing The elements of a product cost are: direct material, direct labour, direct and apportioned overheads. Some costs are variable in that they 'vary' with a level of activity such as production volumes and other costs are fixed and do not 'vary' with activity - rates for example. A management accountant might prepare product costs on a marginal costing basis and only allocate variable costs (direct material and direct labour) to the product.
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