Managerial Accounting: Usefulness in Contemporary Organizations

Running head: Managerial Accounting
Managerial
Accounting

Managerial Accounting
1
Abstract
The role of managerial accounting in the modern scenario is to assist the decision making
through the collection, managing and communication of data to the management. It helps
the management to plan, manage and assess the processes and strategy of the company.
The procedure followed by the management accountants is to create and utilize
information based on time, quality and cost to make operational decisions in the company.
Most of the people play a crucial role in this procedure. The internal auditors have the
accountability to ensure that strategies are implemented and there is an effect of the
operations.
On the other hand, the system professionals are liable to process the data for making it
available to the management so that it can be used for efficient decision making. The
financial accountants provide appropriate financial records to the management for decision
making. The tax department experts participate inefficient forecasting, managing,
assessing of procedures and decisions having an impact on the future tax expenses of the
company. So, this report pertains to the comparison of two journal articles regarding the
use of management accounting concepts in contemporary companies about their
relevance in the decision making by the administrators in real-life companies to achieve
their business objects.

Managerial Accounting
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Contents
Introduction....................................................................................................................... 3
Body................................................................................................................................ 3
Identify any three (3) specific examples of the different types of management accounting methods
and/or techniques from the case.......................................................................................... 3
Is MAS relevant to contemporary organizations? Discuss this concerning the evidence from the
case company................................................................................................................... 4
Compare and contrast this finding with one other journal article you will need to find that has
discussed management accounting systems in another real-life company or companies. Did this
second study have similar findings as to the first chosen article, or mixed and/or different findings?
Explain with examples........................................................................................................ 5
Conclusions made about the relevance of MAS in today’s competitive and uncertain business
environment...................................................................................................................... 6
Four specific outcomes or lessons learned from each of the two articles’ research findings that will
be useful for management accountants in Australian companies..............................................8
References..................................................................................................................... 10

Managerial Accounting
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Introduction
In Management accounting, the managers utilize the information related to accounting for
informing themselves before taking any decision within the company. It assists in better
management and execution of control functions. Thus managerial accounting can be
explained as furnishing of monetary and non- monetary data to the mangers for making
efficient decisions. According to the Institute of Management Accountants (IMA),
management accounting involves participating in managerial decision making, formulation
of plans and performance management systems and providing knowledge in financial
reporting systems. It also pertains to assisting with management in the development and
execution of the organizational strategy (Maas, Schaltegger and Crutzen, 2016).
Thus the role of the management accountant is to accumulate, record and report the
financial information from the various units of a company. He observes and evaluates their
budgetary requirements and advise them about the funding and apportionment. It also
comprises of the assessment regarding the cost of raw material, manufacturing, labor,
sales, promotions, lobbying, internal operational costs and social media
networking( Chiarini and Vagnoni, 2015). So, this report critiques two journal articles
regarding the application of managerial accounting by contemporary companies and its
usefulness in assisting the managers for making informed decisions.
Body
Identify any three (3) specific examples of the different types of management accounting
methods and/or techniques from the case.
One of the management accounting example discussed by Watts, Yapa and Dellaportas
(2014) is the ABC costing method which stands for Activity Based Accounting. The
overhead and indirect costs are assigned to the associated products and services. It
analyses the connection between overhead costs, activities and manufactured goods. It
apportions indirect costs to goods which are less arbitrary as compared to traditional
costing method. However, in this managerial accounting method, some of the indirect
costs like office staff salaries and management are difficult to apportion to one product as
these are related to many products.
Activity-Based Accounting is applied in the manufacturing industry as it enhances the
dependability of data and produces a true and better grouping of costs which are incurred
by the company during its manufacturing procedures. The Activity-Based Accounting is
based upon activities like events, unit of works and tasks executed by specified objectives.
An activity pertains to the cost driver like machine setups and purchase orders. ABC is
utilized for getting a better grasp on costs thereby permitting companies to formulate a
more suitable pricing strategy. It is applied in target accounting, product line profitability
assessments, service pricing and consumer profitability assessments (Bobryshev et al.,
2015).
But despite the theoretical supremacy of ABC over the old volume-based costing models,
the application of ABC in commercial organizations has produced mixed outcomes.
Around 51% of Fortune 500 companies applied ABC model, but only 18% of them were
able to sustain its implementation for more than 4 years. Total Quality Management or
TQM is yet another managerial accounting concept in which a company strives for higher
quality products with fewer defects being transported to consumers. It is the concept of