Explain a real-life example of how managerial accounting helps managers to improve operational...

Question:

Explain a real-life example of how managerial accounting helps managers to improve operational and financial performance.

Managerial Accounting:

Managerial accounting is the process that is intended to generate reports to assist the management in the decision-making processes for Improvement of business operations. It is the accounting information that managers need as basis to make decision about how to improve the aspects of the company that they believe are weak and needs improvement.

Answer and Explanation:

Managers tend to look at reports and performance calculations to decide whether what actions are needed to implement. For example is inventory variance report, the managers will check whether what items do have larger amount of variance. These items will be investigate by the manager by reviewing the related process of pulling out those items in the warehouse and whether there is a proper documents for each pull out. After looking at the real cause of this problems, manager can already proposed course of actions to avoid committing such weakness. This will improve both the operational and financial performance by declaring the real amount of ending inventory, cost of sales and gross profit.


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Managerial Accounting Functions

from Business Management: Help & Review

Chapter 9 / Lesson 1
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