BUS630: Managerial Accounting: Final Paper

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Final1Final PaperRobert BacaBUS630:Managerial AccountingProf.Anthony PerezOctober 7th2013Explain the role of managerial accounting within a business, focusing on its application in costmanagement, budgeting, and quality control. Discuss how managerial accounting techniquescontribute to decision-making processes, and highlight the ethical considerations thatmanagement accountants must address. Ensure to provide examples from real-world scenarios oryour personal experience to support your analysis. Your response should be approximately 1,500words.Final PaperIntroductionDue to varying business characteristics, the managerial accounting techniques applied ineach business may differ. For example, a business in the start-up phase may rely heavily uponbudgeting and capital investment techniques; whereas, a business in the mature/maintainingphase may rely heavily upon cost management and quality control. Ultimately, the techniquesused by management should assist the business in achieving its short-term and long-term goalsthrough effective decision-making. Managerial accounting has an integral part in the businessworld. The purpose of this paper is to explain therole of managerial accounting. The paper willexplain what managerial accounting is along with its role in a business or organization andcertain ethical issues or concerns for the management accountant. The paper will also explain thefollowing topics:

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Final2Cost Management TechniquesCosting MethodsBudgetingQuality ControlDefinition of Managerial AccountingThe accounting sphere can be divided into two parts, financial or external accounting andmanagerial or management accounting. Management accounting is future-orientated, is dynamic,produces forward looking figures and is meant to be decision and control relevant, should not betoo concerned with objectivity and is not generally subject to external regulation (Bromwich,1988). Managerial accounting is also the branch of accounting that meets the manager’sinformation needs. Because managerial accounting is designed to assists the firm’s managers inmaking business decisions, relatively few restrictions are imposed by regulatory bodies andgenerally accepted accounting principles. Therefore, a manager must define which data arerelevant for a particular purpose and which are not (Schneider, 2012).Managerialaccounting cansimply be defined asaccounting that is concerned with provisions. It uses account information inorder to inform managers about best courses of action while analyzing and measuringinformation in order to pursue to an organization’s goals.Role of Managerial AccountingThe managerial accountant has an integral role in the business. The managementaccountant records, prepares financial statements, generates managerial reports and analyses, andcoordinates budgeting efforts. The management accountant is an advisor and has an importantrole in decision-making (Schneider, 2012).Some of the roles of managerial accounting are:Internal financial accounting for score keeping

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Final3Figures for controlDecision making and problem-solving rolesActivities involving internal financial accounting for scorekeeping help provide figuresfor routine decision-making. Compiling actual unit and departmental costs for control bycomparing them with targets. Some activities include periodic internal accounting reports forinternal stewardship and are subject to internal audit (Bromwich, 1988).Figures for control involve using a detailed database which produces figures on a routinebasis but is generally limited to recording past activities using financial accounting conventions.This is the area where most of the problems could persist when it comes to dealing withoverhead our real time data. Activities under figures for control include budgets, standard costs,and divisional control, which are used for attention direction, motivation, and performanceappraisal (Bromwich, 1988).Decision-making and problem solving rolesinclude strategicmanagement accounting, which helps the organization make long-term plans by using strategy,forecasting and evaluating competitors. Another role is investment appraisal, which includes theappraisal of long-term physical investments and the funding of accepted projects (Bromwich,1988). There are many other objectives for managerial accounting. They can be grouped as(Fotache, Fotache, Busca, Radu, & Ocneau, 2011):Knowing the costs of the economic entity;Knowledge of internal operating conditions;Provision of information becoming more relevant for evaluating certain elements offinancial accountingThe purpose of managerial accounting for a long time was considered to be, knowing the cost ofthe economic entity. The role has since evolved and will continue to evolve as time goes on.

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