Management Accounting and History Report: Budgeting and Cost Analysis

This report delves into the realm of management accounting, examining its core principles and applications through a historical lens. The report explores how managerial accounting aids decision-making by analyzing both financial and non-financial data, with a particular focus on internal reporting and its flexibility compared to GAAP. Using the Great Pyramid of Giza as a case study, the report illustrates the practical use of modern cost management accounting in allocating costs and creating budgets. Furthermore, it examines budgeting as a political process, highlighting how budgets reflect financial goals, influence expenditures, and are often subject to restrictions. The report also includes an analysis of a relevant cartoon/comic strip to reinforce the concepts. The report cites multiple sources, including academic journals and books, to support its arguments and provide a comprehensive understanding of the subject matter.

Running head: MANAGEMENT ACCOUNTING AND HISTORY 1
Management accounting and history
Institution Affiliation
Name

MANAGEMENT ACCOUNTING AND HISTORY 2
Management accounting and history
Managerial accounting is an accounting concept that managers use to measure, analyze and
report both the non-financial and financial information that usually assists managers to make
different decisions to execute the organization goals. The aspect of managerial accounting
often centers on internal reporting and is not limited by the General Accepted Accounting
Principles (GAAP) (Boyns, & Edwards, 2013). Taking an example of Great Pyramid of Giza,
modern cost management accounting provides ways to appropriately allocate cost to cost
drivers and hence doing this aspect can accurately assist create budgets that can be used to
compare the actual performance and subsequently correct inefficiencies.
In an effort to attempt to recreate Great Pyramid of Giza structure of Egypt, advanced cost
management accounting can be utilized so as to determine the amount of funds that should be
allocated to each part of the structure. The diverse structures in the Great Pyramid of Giza
could be used as cost bases so as to enhance the modern cost management accountants to
determine the amount of funds to be invested in restructuring (Giovannoni, Maraghini, &
Riccaboni, 2011).
With Great Pyramid of Giza perspective, modern cost accounting management can allocate
costs to specific cost driver such that the material costs can be allocated to materials and labor
costs can be allocated to labor. Furthermore, the modern cost accounting management can
create a prospective budget of the construction that can be periodically compared to actual
performance so as to correct the inefficiencies in recreating the Great Pyramid of Giza
structure.
How budgeting be viewed as a political process
Basically, the budget is considered to be an estimate of costs, revenues, and resources over a
particular period reflecting future financial conditions and goals (Edwards, 2013). In this
case, budgeting can be viewed as a political process through its functions. Budget can assist

MANAGEMENT ACCOUNTING AND HISTORY 3
an administration or a government into shaping its expenditures. Budgets can also be used to
cut costs in most organizations so as to enable the company improves its revenues. Modern
cost management accounting personnel can basically impose new restrictions in the company
expenditure. The aspect of the budget can also be seen as a political process through its
effectiveness. It usually expresses the strategic plans of business units and a company events
or activities in a measurable term (Parker, 2012).
Organizations cannot spend resources beyond its budget because it will result in the company
making losses or over utilizing the available resources. Budgeting can also be viewed as a
political process since government budgeting is considered to be more political than technical
because the government budgeting encompasses making the budget in conformity with the
relevant standards, regulations, and law (Giovannoni et al. 2011).
Cartoon/comic strip image
Relevance of this image to the answer
This particular cartoon illustrates that diver individuals or organizations often have a huge
budget for insufficient resources (Edwards, 2013). Most of the organization or governments
often contains large budget plans, but we rarely meet the budgeted funds because of the less
available resources. Attaining budgets is usually a complex task for most of individuals and
organization because of the pressure that it consists and thus most of them feel the pressure
inserted by the unattainable budgets.

MANAGEMENT ACCOUNTING AND HISTORY 4
References
Boyns, T., & Edwards, J. R. (2013). A history of management accounting: The British
experience (Vol. 12). Routledge.
Edwards, J. R. (2013). A History of Financial Accounting (RLE Accounting)(Vol. 29).
Routledge.
Giovannoni, E., Maraghini, M. P., & Riccaboni, A. (2011). Transmitting knowledge across
generations: The role of management accounting practices. Family Business Review, 24(2),
126-150.
Parker, L. D. (2012). Qualitative management accounting research: Assessing deliverables
and relevance. Critical perspectives on accounting, 23(1), 54-70.