Management Accounting The Process Of Producing Management

Management accounting is the process of producing management reports and accounts which provide accurate and timely information for the use of internal parties within an organisation, such as departmental managers or chief executive officers. The information collected and produced include financial aspects such as amount of cash in hand, capital, liabilities, recent sales revenues, cost of production and also non-financial aspects such as employee’s performances or efficiency of production. In this era of globalisation and increased competition, firms and companies are starting to look beyond management accounting to run a business, that is by forming strategies. Strategy can be defined by an idea to ‘produce long term plans for the†¦show more content†¦Management accountants could incorporate competitors’ information like market share and budgets in the reports to allow comparability. For example the firm can bid at a lower price or try to lower the cost s below that of its competitor which increases its competitive advantage. The usage of competitors’ information has been incorporated into the business world as large companies in New Zealand, United Kingdom and the United States ‘found a high use of competitive position monitoring, competitor performance appraisal based on published financial statements†¦Ã¢â‚¬â„¢(Guilding et al.’s survey, 2000) [5]. Besides, management accounting information could emphasise on two ways to have a strategic advantage, that is through differentiation, and being cost leaders. Differentiation means that having products which are unique, and standing out from what is produced by the competitors. To do this, managers focus on producing better quality products, so that the firm could ask for a higher price, increase demand and supply in the market, which eventually leads to higher profitability. 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