Management Accounting is defined as the measuring, analyzing the business transactions for organizations goal. Management accounting helps the manager to take decision within the organization. Management accounting is the combination of both financial and non-financial decisions making information’s to managers.
Financial accounting and managerial accounting are two different but equally important branches of accounting. Overall accounting includes calculation of financial figures such as tax, profit, expenses, income and many others. However in this article we will only discuss the areas related to the cost
Management accounting uses both cost and financial info to advise management in planning and controlling the organization. Management accounting is used for providing information the organization people. Management accountants design specific purpose reports to serve needs of decision makers. Because internal decision makers are primarily concerned with impact
Process Reengineering Definition: An approach to improvement that involves completely redesigning business processes in order to eliminate unnecessary steps, reduce errors, and reduce costs. Click here to read full article about business process reengineering
Process Costing System Definition: Process costing system is a costing system used in those manufacturing situations where a single, homogeneous product (such as cement or flour) is produced for long periods of time.
Product Level Activities Definition: Activities that relate to specific products that must be carried out regardless of how many units are produced and sold or batches run.
Profitability Index Definition: Profitability index is the ratio of the present value of a project’s cash inflows to the investment required.
Principles of Management Definition: Principles of management are fundamental rules of management that could be taught in schools and applied in all organizational situations. Fayol’s 14 Principles of Management: Division of work: Specialization increases output by making employees more efficient. Authority: Managers must be
Cash Discount Definition: It is an allowance or deduction allowance by a creditors to a debtor. In other words, cash discount is an allowance made by the supplier or creditor when the purchaser pays his account at once or within the period of credit
Prevention Cost Definition: Prevention costs are those costs that are incurred to keep defects from occurring.
Preference Decision Definition: Preference decision is a decision as to which of several competing acceptable investment proposals is best.
Predetermined Overhead Rate Definition: Predetermined overhead rate is a rate used to charge overhead cost to jobs in production; the rate is established in advance for each period by use of estimates of total manufacturing overhead cost and of the total allocation base for
Practical Standards Definition: Standards that allow for normal machine downtime and other work interruptions and that can be attained through reasonable, though highly efficient, efforts by the average worker.
Postaudit Definition: The follow-up after a project has been approved and implemented to determine whether expected results are actually realized.
Zero Based Budgeting (ZBB) Definition: A method of budgeting in which managers are required to justify all costs as if the programs involved were being proposed for the first time.
Yield Definition: A term synonymous with internal rate of return and time-adjusted rate of return.
Volume Variance Definition: The variance that arises whenever the standard hours allowed for the output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate.
Vertical Integration Definition: The involvement by a company in more than one of the steps from production of basic raw materials to the manufacture and distribution of a finished product.
Vertical Analysis Definition: Vertical analysis presentation of a company’s financial statements in common-size form is called vertical analysis.