Management Accountancy – An Introduction

Management Accounting helps managers in answering many important questions which may not be answered by using Financial Accounting information. A few examples of such questions / problems are below

  • A farmer has piece of land on which he can grow six varieties of tomatoes. He needs to decide within the limited available land which variety of tomatoes and in what quantity need to be produced
  • Research & Development team of a pharmaceutical company has discovered three different ways in which a medicine can be produced. The management of the company has to decide which method of manufacturing needs to be used in order to achieve lowest total cost.
  • A truck leasing company has received orders from four customers to arrange transport for goods during their house shifting. The company has trucks located at different parts of Chicago. Sending the trucks from which location to each of the customers would result in lowest total fuel cost.
  • A district school is organizing a science fare for all the interested students. How much would it cost to organize the same? What would be the increase in cost per additional candidate?
  • A company which is in the business of distribution of consumer goods from manufacturers to retailers wants to know what its cash flow requirements are for the next three quarters.

Typically managers fall back on Management accountancy to get answers to the above questions or to solve the problem involved.

Areas for discussion

1) Fundamentals of Management Accountancy
2) Overhead cost allocation – Traditional and ABC Costing
3) Product Costing – Methods
4) Planning & Control
5) Decision Making
6) Quantitative Techniques

Comments

  1. A.PRAVEENKUMAR says:

    is this theory is enough for examination purpose

    • @Praveen – This blog is created to provide readers (for students, accountants, general readers etc) to get basic understanding of Management Accountnacy. It is not designed for any particular exam. However, if you need any clarification on particular topic of your interest, you can request here.

      Thanks
      A V Kiran

  2. Patrick Mee says:

    I am looking to find out information on
    Process Costing (Multiple products) for Flour mills. templates or comparison of cost with other flour mills.
    Any info most helpful.
    Thanks
    Patrick
    April 11

  3. J.V.V.K.Prasad says:

    Hi sir,I’m working as an accounts assistant at a manufacturing company,We are the manufacturers of Stone crushing machines,i want to prepare the cost sheets for our equipment,what is the perfect format of cost sheet for this type of manufacturing concern and can u please help me out.

    regards
    Jvvk.Prasad.

    • A V Kiran says:

      Hi Prasad,

      Apologies for the dealy in responding. The cost sheet for a ‘Stone Crushing Machine’ can be in a simple job cost sheet format. However, the critical element would be ‘Overhead allocation’. Please write to ‘admin[at]managementaccountancy.com’ with details of the manufacturing process, so that we could suggest a cost calculation method that suits your process better.

      Thanks

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