Management Accounting Unit No 1st BBA 5th Semester
Management Accounting Unit No 1st BBA 5th Semester
Management Accounting Unit No 1st BBA 5th Semester
Time Frame Financial Statements are prepared The reports are prepared as per
at the end of the accounting period the need and requirements of the
which is usually one year. organization.
Small business owners and managers are faced with countless decisions every business day.
Management accounting uses information from your operations to produce reports that
provide ongoing insight into business performance, such as profit margin and labor
utilization, so you and your managers have data-driven input to make everyday decisions.
Small businesses can leverage this powerful trove of calculations to improve decision-
making over time for higher profitability and greater competitive advantage.
To evaluate this decision, an accounting manager could examine the costs that differ
between advertising alternatives for each product, ignoring common costs. This process is
known as relevant cost analysis and is a technique that is taught in basic managerial
accounting courses. The same process can be used to determine whether to add product
lines or discontinue operations.
Once the company has determined what products to sell, the business needs to determine to
whom they should sell the products. By using activity-based costing techniques, small
business management can determine the activities required to produce and service a product
line. Embedded in this information is the cost of customers. Deciding which customers are
more or less profitable allows the business owner to focus advertising toward the
consumers who are the most profitable.
While this technique is certainly useful, small business owners should only use these
analyses as a factor in the decision. There could be other non-financial metrics that are
important to consider that would not be part of the analysis.