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Managerial Accounting and Management Cost Accounting

Managerial 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.

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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 information.

What 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 some companies.



Tasks:
Managerial Accounting Illustration
  • Cost maintenance and reporting.  

  • Product profitability analysis and other cost analysis

  • Budgeting and business plan creation

  • Burden allocation

Confidentiality:
  • 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.




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