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BUS 5110 Unit 1 Discussion Assignment
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A guide to assignment on principles of management accounting and its practices.
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Consider the role of management accounting in relation to the company for which you work (orhave worked). Discuss how the principles of management accounting can be utilized. What
specific managerial accounting activities would be useful?
Managerial accounting is the practice of identifying, measuring, analyzing, interpreting, and
communicating financial information to managers for the pursuit of an organization's goals
(Tuovila, 2021). Managerial accounting serves the purpose of providing vital information to
managers to help them in decision-making. Sound decisions depend on the quality of information
they are based on therefore, having quality information in a timely manner will help any manager
to make correct decisions that will build a business value.
The decisions may include branding strategy, pricing, or determining a unit price of a product.
Each decision will affect the business positively or negatively and managers have to make
multiple decisions in a day.
In my previous company, the management team uses various reports from the accounting team to
make critical decisions. One of the main decisions is determining the price point for new
products using breakeven analysis. The breakeven analysis involves calculating the contribution
margin on the sales mix to determine the unit volume at which the business’ gross sales equal
total expenditures (FreshBooks, 2021).
Furthermore, budget reports are useful to outline the financial constraints during the planning
process. Managerial accounting provides useful cost information of each product which enables
us to compare with selling price and determine profit margins. Additionally, marketing strategies
and other activities are evaluated from the cost and return point of view based on data received
from the accounting team. This helps to determine which marketing channel is more effective
making the marketing strategy more focused.
Finally, marketing accounting has been used in our company from planning to controlling stages
of each business activity. Better optimization of resources can be achieved by having this
understanding of all expenses, including inventory waste, hourly labor costs, and overhead costs
(FreshBooks, 2021).
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