Importance of Management Accounting in Competitive Business Environment

Running head: MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING
Name of Student
Name of University
Author’s Note

MANAGEMENT ACCOUNTING1
Executive Summary
This report states about the competitive business environment and the discusses about the
importance of the managerial accounting system. The report also provides the importance of the
managerial accounting technique by using two published journal on the use of managerial
accounting system in manufacturing multinational companies.

MANAGEMENT ACCOUNTING2
Table of Contents
Management Accounting Techniques.............................................................................................3
Activity Based Costing....................................................................................................................3
Balanced Scorecard.........................................................................................................................3
Total Quality Monument.................................................................................................................4
Role of Management Accounting System.......................................................................................4
Differentiation between the Management Accounting System.......................................................7
Role of Management in Competitive Business Environment..........................................................9
Outcomes.......................................................................................................................................10
Conclusion.....................................................................................................................................12

MANAGEMENT ACCOUNTING3
Management Accounting Techniques
Activity Based Costing
Activity Based Costing is the costing method, which is used to analysed the indirect costs
and overheads of products and services. This costing method relates the overhead activities,
manufactured products, costs and indirect costs. The indirect costs usually assigned to the
costing methods. The indirect costs like salaries are problematic to allocate. The usage of the
activity based costing mainly used for target costing, consumer profitability analysis, pricing of
the services rendered by the company and profitability of the product line (Appelbaum et al
2017). The activity based costing can be derived by dividing the cost pool by the cost driver. The
cost driver for the company can be found by analyzing the amount of overhead and indirect
costs, which are related with the particular activity.
Balanced Scorecard
The balanced scorecards, aids the business to identify the strategy of the company by
identifying and measuring the recital of the business, so that the internal functions and external
functions of the business develop. The company used to measure and provide the feedback for
the organizations. The most important part for the balanced scorecard is the data collection
method. The data collection helps the balanced scorecard to provide correct information, which
in later helps the business to develop. The balanced scorecard consists of four parts, which
comprises of business processes, learning and growth, financial data and customer perspective.
The four parts provides a vision to the strategy, which is made for increasing the performance of
the business. As the balanced scorecard assistances the business to develop the performance of
the business, thus it is considered as an integral part of the management tool (Appelbaum et al
2017).