DECISION MAKING WITH MANAGERIAL ACCOUNTING 1
Decision Making with Managerial Accounting
Focus of the Final Paper
Due to varying business characteristics, the managerial accounting techniques applied in each
business may differ. For example, a business in the start-up phase may rely heavily upon
budgeting and capital investment techniques; whereas, a business in the mature/maintaining
phase may rely heavily upon cost management and quality control. Ultimately, the techniques
used by management should assist the business in achieving its short-term and long-term goals
through effective decision-making.
For your Final Paper, you will analyze the role of managerial accounting in two parts. Part I will
provide a general overview of managerial accounting. Part II will provide examples of how
managerial accounting theories and principles are applied in the business world. You may find it
helpful to reflect upon your own professional experiences for examples.
Part I (three to four double-spaced pages, excluding the title and reference pages)
Present the following:
Define managerial accounting
Describe the role of managerial accounting and the management accountant in a business or
organization Describes ethical issues concerns for the management accountant
Describes at least three managerial accounting techniques available and their application within
a business or organization
Part II (Four to six double-spaced pages, excluding the title and reference pages)
Select at least three of the five topics identified below:
Cost Management Techniques
Costing Methods
Capital Investment Decision Techniques
Budgeting
Quality Control
For each topic selected, present real world examples of the application of managerial accounting
techniques within a business or organization. Examples may be gathered from your own
professional experiences or from case studies obtained from credible sources (excluding
textbook examples explored in previous weeks). Presentation of each example should include
how a managerial accounting technique was applied in the business or organization’s decision-
making model. Be sure to support your example with calculations when applicable.
Introduction

DECISION MAKING WITH MANAGERIAL ACCOUNTING 2
Managerial Accounting focuses on providing relevant & useful information to the managers
who will make use of the data for planning, controlling & making well informed decisions.
These reports are prepared for the internal employees of the organization only. Since the
reports are prepared for internal use only, there are no set standards or principles to be
followed in managerial accounting as in the case of financial accounting. It is an excellent
planning & forecasting tool.
Managerial Accounting
The Institute of Management Accountants defines Managerial Accounting as “the process of
identification, measurement, accumulation, analysis, preparation, interpretation, and
communication of financial information used by management to plan, evaluate, and control
an organization and to assure appropriate use of and accountability for its resources.
Management accounting also comprises the preparation of financial reports for non-
management groups such as shareholders, creditors, regulatory agencies, and tax authorities.”
(IMA, n.d.).
Management Accounting provides the data which the managers of an organization
generally use to make important decisions. E.g.: Managerial accounting helps the manager to
decide whether a particular project is doing well or not. If it is not doing well then what
changes need to be brought about so that the objectives are achieved.
Role of Managerial Accountant in Business
Managerial accountants are the key figures of an organization & play a strategic role in the
success of an organization.
 Resource of information: Managerial Accountants are the data mine of any
organization. Their primary task is to keep a track of financial data of their company
which would be used by the management of the organization to base their decisions.
For example, a manager of a manufacturing company needs to decide the price for the

DECISION MAKING WITH MANAGERIAL ACCOUNTING 3
product. A major factor in determining the price of a product is the manufacturing
cost. So the managerial accountant performs the cost analysis for the product & helps
the manager to decide the price of the product so as to stay competitive in the market
(Johnson, n.d.).
 Preparing Budget: Managerial accountants also prepare budgets. Some of the
commonly prepared budgets are sales budget, production budget, cash budget, labour
budget. These budgets help the management to decide & effectively put to use its
financial resources.
 Planning & Controlling: The information provided by the managerial accountant in
the form of various reports generated by him also help in the planning & controlling
function of the organization. In managerial accounting, the process of setting goals,
determining resource requirements, and devising a means of achieving goals is
referred to as "planning." Monitoring financial results and measuring the outcome of
planning processes within the enterprise is called "controlling." The person in charge
of an entity's accounting department is usually called the "controller." The controller
generally plays a key role in both planning and controlling endeavours throughout the
organization (Mole, n.d.).
Ethical Issues for the Management Accountant
Managerial accountants are the employees of the organisation unlike the auditors who are not
on the payrolls of the organization. Therefore, sometimes managers put unnecessary pressure
on the accountant to make the reports that highlight his achievements & alter the data that
brings forth his weakness. It is the duty of the accountant not to give in to such pressures &
present the true & actual picture of the organization.
IMA has played a key role in developing “Standards of Ethical Conduct for
Management Accountants”. These standards lay down the guidelines which are to be

Decision Making with Managerial Accounting

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