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Managerial accountancy consists of information of accounting which provides information to managers in the organization to provide them the decisions of business related with financial decisions and the operating decisions as well. It talks about the cost, the role of management accounting for planning, controlling, performing and implementing those decisions. It provides the information related with financial as well as non-financial decisions of business to make the understanding process clear and deals with the business environment properly. It helps in identifying the process, plan the process, controls and manufacture those processes.
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The information of accounting is really important for the business organizations to successfully meet the needs and objectives of the people. It is concerned with the provision of information to people in the organization who can help in taking the important decisions to improve the effective and efficient operations. It helps in identifying the objectives, goals and certain alternatives to meet the goals and needs of the organization.
Satisfaction of customer is the major priority so the key factors include cost efficiency which needs to be empowered by time with high quality and innovative tools and techniques. There are different functions related with managerial accountancy and they are as follows:
The allocation of resources in a proper order in right place with right sense creates a high sense of profits to the organization. It provides relevant information to take the better decision for the organization point of view. It helps in taking better decision for an organization and its people. It also helps in terms of planning, managing, utilizing, controlling, implementing and performing. Managerial accountancy provides certain information to the managers for taking better decisions which will be a kind of help and benefit to all the people. The key areas are cost efficiency, quality, time as well as innovation in managerial accountancy.
Managerial accountancy contains a number of decisions making for operating as well as variable costs. It carries out two types of cost:
1. Fixed cost
2. Variable cost
That expense which is directly related with the manufacturing part comes under direct cost. Now in manufacturing category there are two types of costs incurred.
Here fixed cost represents the number of production houses which is in rent, warehouses, etc. and in variable costs, it is related with wages, electricity, raw materials, carries inward and other direct expenses which vary with produced units.
Indirect costs (office related expenses)
All types of office expenses and other expenses which incurred to sale the product to the end consumer come under indirect cost.
All types of salary of employees, office rent, percentage of selling and distribution expenses represents fixed costs where all types of commissions interest charges operating expenses like selling and distribution office stationary advertising cost decoration charges carries outward electricity bills maintenance costs taxes office overheads, depreciation charged on fixed assets on a monthly basis on defined methods comes under variable costs and vary with selling of units.
In the same way, restructuring charges, other expenses, depreciation, operation overheads, interest expenses and demand creation expense represents the indirect costs and there is no information about direct cost except the costs of goods sold.
Companies basically used direct cost and indirect cost concepts which is actual cost method and used to calculate the gross profit and gross loss from manufacturing, accountings and net profit and net loss from profit and loss account. By this method they can easily separate the cost in two accounts. One is related to manufacturing part and another is related / used to office part.
Thus managerial accountancy is helpful in earning and performing in a better sense.
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