Discussion: Importance of Managerial Accounting

Student-3 comment, response required below:

Managerial accounting impacts various areas of the business such as finances, performances and cost management if implemented properly. To understand the importance for the business, Manufacturing industry and cost optimization has been discussed briefly.

In manufacturing industry, managerial accounting could improve performance by more streamlined cost and resource allocation. For effective utilization, areas of best performance are identified systematically, and more resources and cost would be allocated based on better returning areas. It also helps on increase capital by reducing spending on weak sectors. Additionally, manufacturing industries usually opt for periodic budgeting practices which is also an extension of the identifying best performers and improve future budgeting for those segments. Moreover, implementation of the Managerial accounting emphasizes on CVP analysis in manufacturing industry which is essential especially for the major investments (Waihenya, C. , 2018).

To realize all the benefits of managerial accounting practices, various tools are being used in different industries. Studies have been done on utilization and effectiveness of different tools to understand profitability, fixed expenditure, and break-even costs of the business operations. These tools can be applied to almost all sizes and scales of the business. In manufacturing industry, tools such as work in progress products and inventory analysis are essential part of the accounting in terms of capital allocation and business forecasting. Another important aspect is strategy in finance and costing. Strategies provide optimum financial resource allocation in parallel with access resources dedicated to investing in new avenues for the business growth and operation improvement projects (Wong, I. , 2018).

After reviewing above research material and examining other studies, it can be evidently seen that managerial accounting plays an important role in improving overall financial decision-making process in different industries which eventually results in future readiness and better financial practices throughout the organization. Further studies can be done in establishing new costing strategies and tools as well as improving existing methods based on business needs to further enhance benefits of this practice.

 

Reference

Waihenya, C. (2018). Effects of Managerial Accounting Practices On Financial Performance: A Case of Manufacturing Firms in Industrial Area, Nairobi (Doctoral dissertation, United States International University-Africa).

http://erepo.usiu.ac.ke/xmlui/bitstream/handle/11732/4543/CONSOLATA%20WAIHENYA%20MBA%202019.pdf?sequence=1&isAllowed=y

Wong, I. (2018). Managerial Accounting Strategies for Optimal Costs.

https://doi.org/10.15760/honors.604