An MBA is a degree awarded to individuals who complete required coursework in the field of Management Science. The MBA title stands for Master of Business Administration and implies that the person holding the degree is qualified to hold a position in senior management within a firm. An MBA manager is similar to the captain of a ship. He is responsible for making decisions and plans about the firm and for controlling the firm's employees. The goal of an MBA manager is to maximise the firm's value through the use of the firm's tangible and intangible assets. He maximises this value by obtaining the highest Profits possible. In the following discussion, I will examine how senior management in general and MBA graduates in particular can use the field of Managerial Accounting to make decisions/plan and control employees in order to maximise Profits. For clarity throughout this essay, senior managers and MBA graduates should be considered as one in the same.
Managerial Accounting Defined
Managerial Accounting is the process of using information systems to provide data to senior managers who then use this data for decision-making/planning and monitoring employee performance in order to maximise profits. The data that senior managers use is supplied by the Financial Accounting function. This information is used to improve the performance of the Marketing function, which generally provides the Revenue of the firm and the Operations function, which generally incurs most operating costs. Marketing and Operations are thus the functional areas which an MBA graduate is generally concerned.
Managerial Accounting is vital to a business's success because it quantifies a firm's performance. By quantifying certain performance variables, senior management can carry out its two most important functions: 1) Decision-Making/Planning and 2) Controlling Employee Behaviour.
The Theory of the Firm tells us that a business exists to maximise...