Management accounting refers to the process of analyzing, presenting and communicating financial data to help managers in strategic decision making, planning and controlling operations.
Key Practices:
- Cost-volume-profit analysis, budgeting, variance reporting and financial projections.
- Non-financial performance indicators like productivity, quality and customer satisfaction.
- Identification of overhead and operational costs for decision-making.
Example:
Using management accounting reports on production costs and sales forecasts, a manufacturer decided to outsource a low margin component.
Key Takeaways:
Management accounting equips organizational leaders beyond compliance with financial insight into operations through tailored reports, enabling data-driven continual improvement and strategy setting.