What is the role of management accounting?

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Management accounting is the process of compiling and reporting information that will be useful in managing a business. This includes budgeting, product costing, financial analysis and break-even analysis.

Budgeting

A good budget is an invaluable tool for any manager. As each month, quarter or year passes, the manager can compare actual expenses to the budgeted expenses and determine if a particular expense was reasonable.

Product Costing

Understanding product cost is essential to knowing how to price the product profitably. A product priced too low will lose money. A product priced too high will not sell.

Financial Analysis

Financial analysis provides financial information to the manager regarding the impact of certain decisions. The manager can then determine whether or not to pursue a particular course of action.

Break Even

Determining what level of sales needs to be met in order to break even is a key measure to managing a business. If a manager is unable to sell enough products, the business will lose money.

Other Information

Management accountants provide information regarding non-financial areas of the business. Any information that can be quantified and used in the management of a business can be provided by the management accountant.

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What is the role of management accounting?

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