cost management accounting notes

cost management accounting. cost management accounting notes cost management accounting mba bba uptu second sem..

Management Accounting : •Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. In contrast to financial accountancy information, management accounting information is: •usually confidential and used by management, instead of publicly reported; •forward-looking, instead of historical; •Pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards. This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making. Definition: •According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its (economic)resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholder's, creditor's, regulatory agencies and tax authorities" Scope of Management Accounting: The American Institute of Certified Public Accountants(AICPA) states that management accounting as practice extends to the following three areas: •Strategic Management: Advancing the role of the management accountant as a strategic partner in the organization. •Performance Management: Developing the practice of business decision-making and managing the performance of the organization. •Risk Management: Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization. Cost Accounting: Cost accounting primarily deals with collection,analysis of relevant cost data for interpretation and presentation for various problems of management. Definition: Chartered Institute of Management Accountants (CIMA) defines Cost accounting as, “The establishment of budgets, standard cost and actual cost of operations, processes, activities or products and the analysis of variances, profitability or the social use of funds”. Scope and Use of Cost accounting: A company having a proper cost accounting system will help the management in following ways: • The analysis of profitability of individual products,services or jobs. •  The analysis of profitability of different departments or operations. • The analysis of cost behavior of various items of expenditure in the organization, this will help in future cost estimation. • It will assist in setting the prices. • Helps in control purposes. • Cost records are the base for MIS. • Cost comparisons help in efficient cost system. Now it is applicable to both service and manufacturing sector. Role of Cost Accounting in decision making: •Discloses profitable and unprofitable activities. •Measures efficiency of unit. •Base for tender and estimates. •Furnishes reliable data for cost comparison. .Guides future production policies. if you have any query please leave the comment if you want any notes we will provide you. you can also contact us myrogation@gmail.com