Importance of Managerial Accounting

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The purpose of management accounting in the organization is to support competitive decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategy. The interesting thing about management accounting is that it is rare to find an individual within a company with the title of “management accountant.” Often many individuals function as accountants within the organization, but these individuals typically operate as financial accountants, costs accountants, tax accountants, or internal auditors. However, the ability to develop and use good management accounting is actually an important ability for many individuals, including finance professionals, operational and marketing managers, top-level executives, and information technologists.

Managerial accounting is therefore concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. Managerial accounting therefore is important to a manufacturing organisation in the following ways: Motivating Managers and Other Employees toward Organizational Goals A well motivated staff enhances performance and productivity. Organizations are able to achieve their goals if employees are well motivated. Management accounting through budgeting motivates managers to direct their efforts toward achieving the organizational goals. In a manufacturing firm a budget indicates how resources are to be allocated and what activities are to be emphasized. Employee empowerment is the concept of encouraging and authorizing workers to take the initiative to improve operations, reduce costs, and improve product quality and customer service. For example, employees can be given incentives to develop new products for the organization. Providing...
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