Management accountant is provide relevant information which
will assist management with decision making, planning economic performance,
controlling, cost and improving profitability.
The
applications of management accounting in business are given below:-
Decision Making
When managers have to decide whether
or not to start a particular project, they need managerial accounting
information to estimate the benefits of various opportunities and decide which
one to choose. Mangers often use relevant costing techniques.
Planning
Managers use managerial accounting
techniques to plan what to sell, how much to sell, what price is to be charged
to reimburse the costs of production and also earn an optimal profit.
Budgeting
Management
accounting has to plan how to finance the
operations and how to manage cash etc. This is very important to keep the
business operations working smoothly. The capital budgeting and master budget are the two important topics in this area.
Measurement of Performance
Managers have to compare the actual
results of operations to budgeted figures to evaluate the performance of the
business. They use managerial accounting techniques such as standard costing to
evaluate the performance of specific departments. They then make necessary
adjustments in those departments which are not performing well.
Forecasting
Forecasting
is a business practice in which corporate senior leaders review a set of
assumptions and make performance predictions. These assumptions may include
internal elements such as past performance indicators, profit levels and
business unit investment returns.
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