Analysis of Management Accounting Trends in Business Decision Making

This discussion board post analyzes the "7 Trends in Management Accounting" focusing on trend #5, which discusses the coexistence and improvement of management accounting methods, including standard cost accounting, project accounting, and activity-based costing. The post highlights the importance of accounting diversity and its relevance in today's competitive business environment, using the scuba diving industry in Waikiki as a real-world example. It emphasizes the role of management accounting in providing data-driven insights for decision-making, increasing profitability, and gaining a competitive advantage. The discussion also touches upon the distinction between managerial and financial accounting, the importance of customer needs, and the benefits of managerial reporting, including predictive accounting for small and large businesses. The post includes references to the video by Gary Cokins and the importance of understanding the financial status of a business.

1st Student
Hello Class,
After reviewing the “7 Trends in Management Accounting (Cokins, 2014),” I decided to
choose trend #5 for this module’s discussion topic. Trend 5 deals with the “Coexisting and
improved management accounting methods.”
In the video Mr. Gary Cokins, CPIM, discusses the purposes & necessities for accounting
diversity. These types of accounting include: standard cost accounting, project accounting,
and activity-based costing. Mr. Cokins explains that each of these types have different
purposes. For example, some corporation’s may only require one accounting method which
may serve their purpose. However, other corporations they may have more complex needs.
Additional examples given in the videos include management accounting and financial
accounting. Managerial or management accounting focuses within an organization on
operational analysis and decision support; the internal business transactions. Whereas,
financial accounting focuses primary on external interest’s regulatory compliance such as
financial statements to stockholders or financial analysts.
In the past, companies had their focus mainly on developing standard products and services
and then selling those to their clientele. However, those have become too common and that is
why accountants had to change their strategy. Nowadays there is a lot of competition one
company has to stand against. Therefore, to make the business somewhat competitive, one
needs to rely on customer’s needs and try to fulfill them (Cokins, 2014).
My real world example focuses on the “scuba diving industry.” Having recently relocated to
Hawaii, I’ve noticed the dive industry in Waikiki is very competitive with 9 dive shops in a 5-
mile radius. So, how can a small business standout in this competitive market? And, why is
accounting important? In our first module we are learning how management accounting uses
information from operations to produce reports that provide ongoing insight into business
performance. As mentioned, even though dive shops are considered small business, the
operations model is very similar to large business when it comes to profit margin and labor
utilization. That data-driven input is necessary to help guide small business decision-making
while increasing profitability and gaining competitive advantage over the other dive shops.
Of course, there are other factors that will play a very important part to such as demographics.
Aaron
Reference
Accountants, I. (2014, February 18). 7 trends in management accounting -
Introduction. Retrieved February 11, 2020, from https://www.youtube.com/watch?
v=gRyW2_Ay2Cw&edufilter=NULL
Reply to Thread Here:

I would like to thank you for your assessment of trend #5
which is on “Coexisting and improved management
accounting methods”.
I am agreed with your view that the need for the adoption of
management accounting methods varies on the nature and
characteristics of the companies; and this requires the
adoption of either one accounting method or more than one
methods. This implies that the complexity of the accounting
methods is reliant on the needs of the companies. Another
crucial aspect mentioned by you is the growing importance of
considering customer’s need for gaining the required
competitive advantage. It can also be seen from the example
of scuba diving industry that management accounting plays a
crucial part in acquiring and utilizing information for the
development of reports so that the management accountants
can get the required insight into the business performance.
You have also indicates towards the importance of data-driven
input for assisting the decision making process of the small
businesses. It would be great if you provide more explanation
on this aspect.
2nd Student
One must realize that business is not a cookie cutter model and not one fits all from small to
big business. As the video explained there are different types of business needs one can be the
needy business and some that don’t require much attention at all. Yet how do we understand
how to meet those needs of the individual business and their consumer to understand profit.
After the videos I think its best to understand what exactly managerial accounting reporting
entails and how it can move a company forward to customer profitability. Managerial
reporting is an accounting report that displays the financial status of a business at the present
or over a specified period, Ignite Spot Accounting, 2018. These reports act as a complete
picture of a how business is performing. Once compiled the financial information can provide
data like transaction, operational cost, product profitability, and regional sales, Ignite Spot
Accounting, 2018. Both big and small business can benefit greatly from this comprehensive
report especially small business who can pull important strategic insights from these reports.
Whether you as the business or accounting manager reporting and functions can provide a
sense of a business finances and provide insight to opportunities within the marketplace.
Predictive accounting also plays a part when trying to move forward to consumer
profitability. A gap is widening between what management accountants report and what
managers and employee teams want. “The gap is being caused by a shift in managers’ needs –
from needing to know what things cost (such as a product cost) and what happened to a
greater need for detailed information about what their future costs will be and why. The past

reflects decisions already made decisions that will be made are the ones that impact the
future” (Copkins, n.d).
References
Copkins, G. (n.d). The Top 7 Trends in Management Accounting. Retrieved from CCH :
cchcpelink.com/top7trends
Ignitespot . (n.d). MANAGERIAL ACCOUNTING REPORTS. Retrieved from Ignitespot :
https://www.ignitespot.com/managerial-accounting-reports
Reply Here:
Thank you very much for contributing towards the critical
assessment of managerial accounting.
It is mentioned by you that there is a greater need for
comprehending the ways in which needs of businesses and
customers can be met for increasing overall profitability. This
can be done by using managerial accounting as a tool for
acquiring information on the financial status of the companies
so that the management accountants can identify the area
where the businesses are performing good and areas that
need attention. Different types of data such as data on
operational costs, transactions, regional sales, product
profitability and others can be obtained from managerial
accounting; and this information assists the managers in
developing appropriate strategies for improving the overall
business performance. These benefits of managerial
accounting can be availed by both the small and large
business organizations. In your discussion, you have
mentioned about the role of predictive accounting in case of
consumer profitability. I would like to request you to provide
more insight on the use of predictive accounting.