Management Accounting is the presentation of accounting information in order to formulate the policies to be adopt by the management and assist its day-to-day activities. In other words, it helps the management to perform all its functions including planning, organisation, staffing, directing and controlling.
Imposition of fees: Direct Tracing, Activator (Driver Tracing) and Allocation (Allocation).
Understand the meaning of the cost and cost-related terminology is very important in the study of management accounting. The imposition of costs on products, services, customers and goals of the management information system. Therefore, the accuracy of the cost of producing more information that can be use to make better decisions.
Costs (Cost)
Costs (Cost) are cash or cash equivalents which are intend for the moment or in the future for the organization. Because the source of the non-cash can be restore with the desire goods or services.
Opportunity cost (Opportunity Cost) was the lost benefits (submit) or sacrifice in an alternative chosen among the other alternatives. Load (Expense) or costs that are expire are costs that have already been use to generate income. Income must be greater, so the company can continue to run. In other words
Object Cost (Cost Object)
Management Accounting System is the structure to measure and is commonly refer to as the Cost Object. Cost Objects can be anything, such as products, customers, departments, projects, activities, and others that are use to measure and charge. Few years, activities emerge as the most important cost object. Activity is the basic unit of work done in an organization and can also be describe as a collection of actions within an organization that is useful for managers to do the planning, control, and decision making.
Imposition of Accuracy (Accuracy of Assignment)
Accuracy is a relative concept and must be use in terms of the imposition of fees. The goal is to measure and charge the costs of resources consume as possible.
Traceability is the ability to charge, which is economically feasible base on causal relationships. The relationship between costs and the cost of the object is to improve the accuracy of the imposition of fees. The costs can be related to cost objects directly or indirectly. Indirect costs (Indirect Cost) are costs that cannot be trace easily and accurately as the cost object. Direct costs (Direct Cost) is the cost that can be trace easily and accurately as the cost object. "Easily Traceable" has the meaning that fees can be impose in a way that is economically viable, while "tracked with Accurate" has meaning that can be charge by the causal relationship.
Meaningful traceability can be easily and accurately, while search (tracing) means the actual imposition of costs on cost objects by assigning size that can be observe over the resources consume by cost objects. There are 2 search fees:
Direct search is a process of identifying and loading costs specifically related to and physical with objects.
- Search Movers are use to charge a fee on the object.
- Allocation is the imposition of indirect objects to the cost. Indirect costs, either by using direct search or Activator.
The cost of products and services
The output of the organization is one of the most important cost objects. There are two types of output, i.e. intangible products and services. Intangible products are produce by changing the raw material through the use of labor and capital inputs. The service is a task or activity organization. The service was also produce with the use of materials, labor, and capital input. Different services with tangible products in four important dimensions:
- Intangible services: the buyer cannot see, hear, feel or taste a service before the service is purchase.
- Durable: services can be save for future use by customers, but should be consume when held.
- Inseparable: manufacturer and direct contact with the time of the Exchange. As a result, the services often cannot be separate from the producers.
- Not always the same: there is a greater chance of variation in the organization of services rather than the production of the product.
Different costs for different purposes:
The cost of imposition of fees is in support of managerial specifics. The internal value chain required to design, develop, manufacture, market, distribute and serve the product.
The cost of the product and the external financial reporting:
Costs fall into two main functional categories: production and non production. Production costs are the costs associate with the manufacture of goods and provisions of services. Non production costs are the costs associate with design, development, marketing, distribution, customer service, and general administration.
For intangible goods, production costs and non production are often refer to as the cost of manufacturing and non-manufacturing. Production as can further classify costs:
- Direct materials: materials that can be produce on goods or services being produce.
- Direct labor: labor can be run on goods or services being produce. Physical observation can be use in measuring the quantity of employees engage in a product and service.
- Overhead: all production costs (other than direct materials and direct labor) are group in one category call overhead.
Cost of sales and administration
The non production cost of the two general categories: cost of sales and administrative expenses. The necessary cost to market, distribute and serve the product or service is the cost of sales. While the whole of the costs associate with research, development, and public administration are not subject to production or marketing, are classify as administrative expenses.
The play Cost and conversion. Combination of different costs and concepts of conversion costs and fees. The main cost is the sum of the cost of direct materials and direct labor costs. The conversion cost is the sum of the cost of direct labor and overhead costs.
External Financial Reports
Income statement: manufacturing company
Production: prices reflect total costs of goods that were resolve during the period. Goods in process: all units that have been resolve partially in production at that point of time.
Income statement: service company
Service company does not have inventory of finish goods, early or late. Different from manufacturing companies, service companies that are not possible because of the store service.
Types of Management Accounting Systems: Brief Overview
Management base on function accounting system (FBM) has known from the year 1900 's and still is use in manufacturing and services sectors. Activity base management accounting systems (ABM), which are widely use and are getting high, particularly among organizations that have a variety of products and customers, products that are more complicate, more product cycle time, increase requirements to quality, pressure and intense competition.
FBM & ABM accounting system
Review Costs
- FBM. Resource costs, functions and then on the product. Search Activator systems only using production output that is highly correlate with the production output. Approach to the imposition of this fee is a cost calculation base on the production or function (FCB).
- ABM. In the calculation of cost base on activity (ABC), the cost can be trace to the activity, then the product. The imposition of cost is base on activity on allocation of search; in fact, it can be refer to as an intensive search. The price of the staple products base on activity tends to be flexible. The definition of the price of the staple products is emphasize for planning, controlling, and taking better decisions.
Reviews of Operational Efficiency
- FBM. Management approach is base on the function to control charge on organizational units, and then demanding organizational units to manage responsibility to control the fees charge. Performance is measure by actual comparison results with standard or budgete results. The emphasis is a measure of financial performance.
ABM. Significantly, the control subsystem is base on different activities with a system base on function. The emphasis is on function base on management fees. Activity base management focuses on the management of activities that are earn by providing value. Review the process of identifying the causes of cost activity, work measurement of what she has done, as well as evaluating the performance of the work and the results achieved.
The choice of the management accounting system
Management accounting based on activity offers a significant advantage. For many companies, the benefits of the transfer of the system exceeds the ABM system FBM costs. So, the use of ABC and ABM are increasingly widespread. Attention to management accounting based on the activity became high.
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