Management accounting Assignment Example | Topics and Well Written Essays - 1000 words

Management accounting - Assignment Example The following discussion shows how the Management Accounting information assists the management of a company. Planning This involves looking ahead and preparing future courses of action that need to be followed. Managers devise a systematic programme regarding future courses of action. Planning is selection of the best way or alternative of performing various managerial functions in an organization. Management accounting information is very vital in planning management function (Demski 2008). The basic objective of a company is to ensure that the company is profitable by creating competitive advantage in regard to prices as well as market expansion. In choosing any alternative the company management must consider its potential benefits and its underlying costs against the company resources. Management accounting information is important in projecting profits in new established markets. The required information includes profit margins, sales volumes and costs in firms operating in sim ilar markets. This information is combined with projected sales. Most companies express their management plans based on the management accounting information formally in budgets. Budgeting is considered a core part of the planning process. Controlling Controlling management function in a company ensures that the planned alternative is being followed. It is important to note that feedback plays an important role indicating the effectiveness of control in a company. Management accounting information is used when comparing the budgeted results and its actual results mainly referred to as performance report. This report shows whether the company is operating as planned as well as pointing out areas that need some attention. The management accounting information used for comparison includes sales profits, sales volume and the expenses. In cases where the targets are not met then the company management establish the next relevant course of action strategy hence the need for a revised plan by the top management. According to Hermanson (2010) the management accounting information plays a significant role in providing the relevant feedback in regard to company progression and performance (Hermanson 2010). The feedback is mainly used as a control tool in regard to the company operations through the comparison of the actual and the budgeted results. Decision making Decision making is one of the core functions of management which is a continuous process. Company management obtains the relevant management information and various costs calculation (Demski 2008). The obtained management accounting information is used in establishing and developing the best decisions at all the levels of the organization. The information that is used mainly indicates how a company is effectively conducts its operations. The management makes use and exploits the information in the management and its underlying leadership skills in its underlying decision making processes. The management accoun ting information is essential in a company making key decisions in the operational and the production processes. The role of management accounting is to provide key relevant information which is used in making decision within a company. Communicating In addition to the above management functions, company management oversees the company operations on daily and long-term basis thus ensuring that the company is op