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Management accounting or cost accounting is a management tool designed to provide useful information to company officials.
The Importance of Management Accounting is considerable, even if the company has no obligation to hold a Management Accounting, unlike the General Accounting or Financial Accounting.
The primary purpose of the Management Accounting is the analysis of costs and the analysis of results from there, hence the name originated in Cost Accounting but its contribution to the management goes beyond this single goal. The reasons for the centrality of the Management Accounting in business administration are multiple:
It serves to determine for each expense, each charge, what belongs to a product in a company's business. From there, it is essential to establish the estimate and gives the company the figures to set its price.
In highly competitive markets, the market price tends to make producers as taught economic theory. In practice, the market prices are formed and adjust according to the feedback from buyers over proposals to producer prices and for this management accounting, which is based on cost calculations, provides the basis for determination.
It is used to make decisions, like accepting an order, introduce a new product, a new activity, or, conversely, remove them. In the same vein, management accounting provides the ability to build forecast to change the activity, program budgets and analyzing post deviations from forecasts.
Incidentally, management accounting brings to the General Accounting certain information. In some cases, its role is irreplaceable examples, assessment of stocks of finished products and stocks, or evaluation of assets created by the company itself.
