Management Accounting: Finance And Accounting For Nonfinancial Managers Essay

Question:

Discuss about the Management Accounting of Finance and Accounting for Nonfinancial Managers?

Answer:

Discussion on Management Accounting Skills

Skills in Management Accountant

In what stages are these skills learned or developed

Management accountant requires numerous skills for managing the designation and serve any particular organization. Key responsibilities of management accountant include:

Management Accountant prepares reports, commentaries, budgets as well as financial statement

Management Accountant requires undertaking financial administration as well as internal audits

Management Accountant should maintain cordial relationship with staff members as well as other colleagues working in an organization

Management Accountant should develop as well as manage with the financial systems and policies

Management Accountant should negotiate as well as obtain finance for most of the projects

Management Accountant should control over the income as well as expenditure for the same

Management should be responsible for creation of business strategies and generation of future shareholder value

Managerial accounting skills development in the workplace

Key Skills for Management accountants requires:

Proper oral as well as written communication skills

Management Accountant should be capable of working in team

Excellent numerical as well as analytical abilities

Excellent maths as well as computer skills

Dynamic business environment requires managerial accountants for keeping skills updated for meeting the business needs of the companies

The above statement implies that business environment requires efficient managerial accountants for updating the financial statements of particular business organization. Management Accountant mainly handles the finances of business enterprise (Atkinson, 2012). They believe in improving in the level of profitability as well as growth in the near future.

Discussion on Job Costing Versus Process Costing

Production Process at Coca-Cola

Coca-Cola Company deals its business activities in manufacturing of non-alcoholic beverages. On market analysis, 11000 soft are consumed every second of daily activities.

First stage of production includes mixing of direct materials that includes:

Water

Refined Sugar

Secret Ingredients for making liquid for beverages

Second stage includes filling of cleaned as well as sanitized bottles. It places cap on each bottle.

Third stage includes filled bottles inspection as well as packaging for the same

Work in progress generally starts from first stage of production that includes mixing as well as blending for the same (Bhattacharyya, 2011). It continues in the next stage like bottling and ends in the third stage. This includes inspection, labelling as well as packaging for the same.

Comparison and contrasts between job costing system and process costing system

Products costs

Similarities

Product costs includes direct materials, labour as well as manufacturing overhead

Differences:

Product Costing

Job Costing

It is assigned with departments as well as processes

It is related with assignment of jobs


Unit Cost Information

Similarities

Unit cost information requires management for proper decision-making purposes

Process Costing

Job Costing

It comes especially from departmental production report cost

It comes from job cost sheet


Inventory Accounts

Similarities

Inventory accounts mainly includes inventory, raw materials as well as finished goods inventory

Differences

Process Costing

Job Costing

Different WIP inventory accounts specifies for each department as well as processes

One WIP Inventory accounts

Includes job cost sheets track cost for job assignment


Justification for selection of best costing method

Job costing is far better in comparison with process costing method. Job Costing provides detailed accumulation of production cost with specified units in an overall manner.

Discussion on Activity-Based Costing

Activity-based costing helps in determining true costs. This method is adopted by most of the companies in recent scenario. It relates with innovation in cost accounting criteria. It mainly ensures activities for consumption of companies for resources and driving related costs (Burritt, 2011). Most of the companies adopt activity-based costing for production of goods as well as services. Company needs little overhead costs and manufactures for identical products. It requires special attention for each product. This method helps in assigning costs of products as well as services based on resources.

In the recent scenario, companies are reducing in their dependency for traditional accounting system for development of activity-based cost management systems. Manufacturer believes in ABC system for rapid growth in some of the markets (Eldenburg, 2011). It helps in increased indirect costs for usage of automated system for accurate cost information for the same. It helps in managing with the business as well as gain in the competitive advantage. This method helps in building relationship between costs and driving activities.

Discussion on Contribution Margin Income Statements

Contribution Margin Income Statement is more helpful in comparison with functional statement to managers. This reveals contribution margin includes variable expenses and deduction from the contribution for arriving at profit and loss statement. Fixed production costs are shown especially in the income statement in accordance with the contribution margin in an overall manner. Variable selling as well as administrative expenses includes relates variable production costs in accordance with the contribution margin for the same. Gross Margin Replacement includes in the final contribution margin part pertaining to business activities (Epstein & Lee, 2011). Therefore, income statement preparation helps in determining in the expenses for true cost revenues in an overall manner. Business organization uses contribution margin in way of gross margin for large proportion on matters relating to fixed production costs for the same.

Discussion on Balanced Scorecard

Nordstrom Inc is one of the fashion retailers offering clothing, accessories as well shoes to its customer base (Lee, 2014). Balanced Scorecard helps in identifying four major perspectives and importance in the current market scenario.

Figure: Balanced Scorecard of Nordstrom

(Source: Fields, 2011)

From the above balanced scorecard, it is easy to understand four perspectives relating:

Financial

Nordstrom needs to conduct financial analysis and generate revenue in the near future. It is recommended for reduced expenses and increased revenues for the same.

Customer

Nordstrom believes in rendering quality services for the potential customers at affordable prices (Horngren, 2011). It targets the female younger population because they show more interest in recent brands. Customer preferences changes from time to time.

Internal Business Processes

Nordstrom deals in the fashion sector and innovation plays an important role for sustaining in the competing global market.

Learning Growth

Nordstrom believes in maintaining cordial relationship with customers as well as employees. Training provided to the staff members in understanding roles as well as responsibilities in an overall manner.

Reference List

Atkinson, A. (2012). Management accounting. Upper Saddle River, N.J.: Prentice Hall.

Bhattacharyya, D. (2011). Management accounting. Noida, India: Pearson.

Eldenburg, L. (2011). Management accounting. Milton, Qld.: John Wiley & Sons.

Epstein, M., & Lee, J. (2011). Advances in management accounting. Bingley, UK: Emerald.

Fields, E. (2011). The essentials of Finance And Accounting For Nonfinancial Managers. New York: American Management Association.

Horngren, C. (2011). Introduction to management accounting. Upper Saddle River, N.J.: Prentice Hall.

Lee, J. (2014). Engineering asset management 2011. London: Springer.

How to cite this essay: