managerial accounting jobs

managerial accounting jobs

The Role and Importance of Managerial Accounting in Today’s Business Environment

1. Introduction to Managerial Accounting

Managerial accounting positively affects people’s daily lives. Most people reading this book are considering a business major or a business job upon graduation. The managerial accounting course is designed to serve future managers, not necessarily future accountants. Indeed, most of you will not become accountants. However, all of you will make business decisions. Managerial accounting provides data that helps people inside a business make informed decisions. “It is the lifeline to the ultimate success of any business,” according to the National Association of Accountants. Its principles are the guidelines for action that are used by people inside a business. Without sound information, you are unable to make important choices in life. These may include such decisions as whether to obtain a business degree, whose advice to trust, where to live, what job to accept, what investments to choose, and so on. The better the accounting information, the better the decisions.

Managerial accounting, on the other hand, is much less familiar. Most people have never heard of the term managerial accounting until they take a college course in accounting. But managerial accounting is far more inclusive than financial accounting.

When you hear people talk about accounting, you are likely to hear them talk mostly about financial accounting. The primary reason for this, we suspect, is that most people have some experience with accounting. If you have worked for a business, you probably had an accounting department. Even if the business was small and handled accounting activities informally, you probably generated or were responsible for some of the transactions recorded. Maybe you even helped close the books and prepare the financial statements. As a result, your experience, combined with the media coverage of financial accounting issues, likely exposed you to a wide variety of financial statements, management’s notes, and the auditor’s report.

2. Key Concepts and Techniques in Managerial Accounting

(3) Decision making is the means for choosing the most appropriate alternatives for an organization and its stakeholders. Managerial accountants develop relevant data that make decision making require less conjecture. They understand the effects of these decisions and compensate that understanding by taking the necessary processes. As a result, management’s choices will be less risky. It begins by carefully understanding the proposition. According to this model of decision making, relevant information (either historical costs or future costs) is placed in decision alternatives (either in their costs or in their future relevance). In this process, alternative decision procedures can never be substitute for good judgment.

(2) Control is a continuous process that realigns the organization and its plans, actions, and results to a changing environment. The focus of control is the organization as a whole or some significant part of the organization. Because of its broad focus, control establishes the information base for managerial decision making. It requires identification of the areas that are performing well and those that are not. Finally, when the rules are not followed, there must be an accountability mechanism to ensure that the rules are followed in the future.

A common general classification of the three most important concepts in managerial accounting follows: (1) Planning includes establishing a basic strategy, selecting a course of action, and specifying how the action will be implemented. It requires defining the framework required to implement the decision, forecasting future results, and establishing the objectives needed to meet these results. More than just a budget or a projection, it requires setting measurable goals that the company will be required to meet or exceed while producing the desired results. Once done, the end must be determined so the company has a course that will lead it to success.

3. Applications of Managerial Accounting in Various Industries

Function of operating cost system

In a service sector such as banking, employees demand $4 an hour. There is no way a banking unit can increase its revenues by offering better service to time customers without increasing frontline staffing. It is also difficult to reduce overhead costs without cutting those services that attract customers. Aside from exploration or drilling activities in the oil or gas industry, what can be accomplished with a chemical production unit, or shipments in the air cargo industry flow through operating departments. From a departmental perspective, the services flow is uncontrollable, demanding, and unpredictable. From a time perspective, the flow of work is completely predictable; it parallels the daily cycle of customer service. Respond to short suppertime customers demand service and will not be able to quickly dispatch them. In general, companies must be able to deliver quality and integrity rather than quantity on processing or cycle responsive time activities.

Demand drive

A corporation cannot improve cost performance without understanding the building blocks of both cost and cost performance. Modern cost accounting is based on a time driver model that links activity data to overhead costs. This model is simple to understand and provides useful information that cannot be obtained from traditional departmental cost accounting systems.

Time driver model

Companies measure success largely in terms of customer satisfaction and profitability. Companies need sound managerial accounting data to make incremental improvements, obtain substantial change, and make an economic profit. Managers cannot plan or execute marketing strategies or choose new customers without understanding their costs, profit margins, and the differences in profit potential between different customers and market segments.

Customer satisfaction and profitability

Cost accounting methods are used in a wide variety of industries. Within the chemical industry, cost accounting focuses on the costs of production and the valuation of inventories. In the banking industry, managers use cost accounting to assess the costs of processing transactions. Other industries that frequently use cost accounting systems to obtain data for managerial planning and control include retail merchandising, oil and gas production, laundries and cleaning firms, the electric power industry, restaurants and food services, engineering, air conditioning and refrigeration, photographic laboratories, and governmental units.

4. Career Opportunities and Advancement in Managerial Accounting

Managers and business leaders must be flexible and open about movement within an organization. It is not uncommon for managerial accounting graduates to be transferred from job to job within the company. In this way, he or she can gain valuable experience in all areas of the business and may identify the job that is best for them. Since flexibility and movement within the company are likely, a person’s loyalty may be best shown by considering what is best for the company in making decisions about changing jobs and possibly moving to other areas of the company.

Advancement in managerial accounting can be achieved by progress within one organization or by moving to another organization. One example of advancement within an organization is the promotion of a senior cost accountant to the position of budget supervisor, controller, or part of top management. Movement from one organization to another involves changing from an organization with limited opportunities for advancement to an organization where more advancement opportunities are available. Advancement can mean obtaining a higher position within the same department or moving to another area of the business. In other words, the career ladder of a managerial accountant could go vertically or horizontally.