Question

1 Icon denotes assignments that involve decision making Discussion Questions 1. Describe the managerial accountant's role in business plan- 2. Distinguish between managerial and financial accounting on ning, control, and decision making a. Users and decision makers. d. Time dimension. b. Purpose of information. e. Focus of information. c. Flexibility of practice. f. Nature of information.

Answer 1

MANAGERIAL ACCOUNTANT'S ROLE:

BUSINESS PLANNING:

Managerial accountants record financial information for their companies that is used by the organization’s management team to aid in the decision-making process. Managerial accountants develop budgets, perform asset and cost management, and create important reports used by the management team. Managers depend greatly on the information provided by managerial accountants to develop effective business strategies.

CONTROL:

The information presented by managerial accountants is often used by managers to forecast and plan. Managers want to know what products are best to manufacture now, but also desire to know where they should focus their efforts in the future. Managers use the information to develop specific goals and strategies for the future. Planning requires that managers align the company’s objectives with its available resources. A manager’s ability to forecast and plan depends on the budgets developed by accountants.

DECISION MAKING:

Managers must often make decisions that require choosing between alternate products. For example, a manager of a manufacturing company may need to determine the best product to manufacture to remain profitable and the price to charge customers for the product. A major factor in determining the price of a product is the cost related to manufacturing the product. Managerial accountants often perform cost analysis for certain products and divisions, which include variable and fixed costs. The production decisions made by managers are a direct result of information received from managerial accountants.