Decision Making with Managerial Accounting Due to varying business characteristics, the managerial accounting techniques applied in each business may differ. For example, a business in the start-up...

Part 1
Managerial Accounting
Managerial accounting is one of the most important internal management processes of any organization to support decision making process. Hilton and Platt (2011) stated that management accounting is the process of identifying, measuring, analyzing, interpreting and communicating information in pursuit of organization’s goals. In the words of Mahfar and Omar (2004), “It is through management accounting that the managers get the tools for doing their functions”. Thus the management accounting provides all the relevant information to the managers so he can make an appropriate decision in the best favor of business and company may maximize its profitability as well as achieve a sustainable growth in long run. In the word of Briciu and Capusneanu (2011), “Managerial accounting is an integral part of management that deals with identifying, presenting and interpreting information used for strategies, decision making, resource optimization, employee information, asset protection planning and control of activities, information of associates or other external information users.”
Role of Management Accounting and Management Accountant in Business
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. Management accounting not only controls the wastage of resources, running of internal controlling system and tuning the system to greater efficiency but also proves to be bedrock of long term growth and expansion of businesses.
Management accountants play a key role in efficiently running of internal management system and decision making processes. Management accountant adds value to the firm in many ways like Improving revenue generation, increased business efficiency, maintaining all relevant information needed for decision making purpose and of course efficient resource utilization through better management and control (Narvas, 2017).
Apart from quantitative factors there are some qualitative factors also that help to enhance the value of firm. For example, timely disclosure of financial statements, accurate facts and figures, company’s future strategy and long term policy and synergy between company’s objective and growth. A management accountant plays a key role in supporting all these qualitative factors and consequently the added value to firm is reflected through market indicators. Thus, role of management accountant in the sphere of technological advancement becomes more important and value centric and a holistic approach of garnering its benefit accrue the value addition to firm. The role of management accountant is challenging one and of course needs an expertise skill for discharging his duty efficiently. Self confident, good critical thinking ability, better business understanding capability, sound logical reasoning and technological savvy are some of the characteristics of a good management accountant (Seigel, 2000).
Ethical concern for Management Accountant
Management accountant handles all internal data and often allocate production costs, prepare internal cost & management report and helps the managers in decision making processes. Accounting activities lead to ethical issue and therefore, it is imperative for management accountant to be ethical in all its accounting activities.
Improper cost allocation is a very common area where a management accountant can significantly alter the cost sheet by improper cost allocation to different heads. In the case of overproduction, absorption costing method is abused to report higher profit by recording fixed costs in final inventory account. Cost-plus contracts are another area where management accountant misuse his authority by shifting the overhead costs from Income statement to contracts. This activity damages the reputation of company in the eyes of client due to inco
ect contract bill and distorts the Income statement on which long term planning and strategies are prepared. Thus, company gets damaged more in long run than short term.
Assets are generally replaced on the review and suggestion of management accountant. Replacement or old assets with new one attract fresh investment and therefore, return on investment (ROI) decreases. Thus, management accountant who doesn’t recommend the replacement of assets on the basis of reduced ROI leads to unethical move that may hamper the production and rejection of project.
Managerial Techniques and their applications
There are many managerial techniques used in internal management and control. The tree major managerial techniques include CVP Analysis, Budgetary control and Return on Investment. The CVP is one of the major tools of decision making process in managerial accounting. According to Budugan & Georgescu (2008), “Cost-Volume-Profit (CVP) Analysis is the analysis of the cost evolution models, which points out the relations between cost,...