Managerial Accounting and Management Cost Accounting
Accounting is also called management accounting or cost accounting. A
cost or management accountant produces
information for internal company use.
This type of accounting is quite different than general ledger or
financial accounting. The main difference is that the reporting is
secret, and is only for management. The management reports generated
will rarely be seen by anyone outside the company.
The information generated
involves the cost and profits details of the product or service of the
company. Competitors do not need to know this information. If they did,
they would have an unfair advantage when quoting on new work.
While the cost or management accountant takes the normal accounting and
business classes in school, he also acquires special costing and
financial analysis skills from working with detailed product
education is required for this type of accountant?
- A bachelor degree in business is usually
required to be an accountant in this field. A CMA or CPA designation
may also be required at
- Cost maintenance and reporting.
- Product profitability analysis and other cost
- Budgeting and business
- This job works with very confidential
information such as:
- Wage and Salary information
- Product and service costs
- Rents and lease costs
- Plans for employee reductions, future
business plans, etc
- The accountant must maintain confidentiality of
the information he has been given.
Competition between companies for a limited of new contracts from
customers has given increased importance to managerial accounting. It
is extremely important that a business knows and
understands its cost to produce a product or service. For many
products and services the profits are thin and the competition is stiff.
Many firms have and will continue to acquire new work at a price that
will put them out of business because the price is less that the firm's
cost. Just as bad, many will not get new work because they do not know
enough about their costs to reduce and control them, while companies
that do know their costs and control these costs will win.