Managerial Accounting and Cost Accounting
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Abstract
This paper discusses the differences between managerial accounting and cost accounting. While cost accounting is an aspect of managerial accounting; managerial accounting provides more information for financial reports. Furthermore, this paper confers about lean production. Lean production is a new manufacturing tool that focuses on eliminating wasteful spending while empowering employees. Lastly this paper talks about how to prepare for a reduction in budget. This most sensitive issue when reducing a budget is exactly how the reduction is going to be communicated to employees while still maintaining employee morale.
Cost Management
Spreadsheet
Program Area
Best Case:
Worst Case:
Administration Salaries:
Committed
Amount Cut
Committed
Amount Cut
Administrator
$60,000
$60,000
$60,000
Assistant
$35,000
$35,000
$35,000
Two Secretaries
$42,000
$42,000
$21,000
$21,000
Supplies
$35,000
$25,000
$10,000
$20,000
$15,000
Advertising and Promotions
$9,000
$9,000
$9,000
Purchased Services:
Accounting and Billing
$15,000
$15,000
$15,000
Custodial
$13,000
$13,000
$13,000
Security
$12,000
$12,000
$12,000
Consulting
$10,000
$10,000
$10,000
Community Mental Health Services:
Two social workers
$46,000
$46,000
$23,000
$23,000
Transportation
$10,000
$10,000
$10,000
Outpatient Mental Health Treatment:
Psychiatrist
$86,000
$86,000
$86,000
Two Social Workers
$70,000
$35,000
$35,000
$35,000
$35,000
Totals:
$443,000
$398,000
$45,000
$349,000
$94,000
Cost Management
Managerial accounting is recording, regeneration, planning, and analysis of incomes and expenses. Managerial accounting provides mathematics to support managerial decisions. Managerial accounting entails comparisons, analysis, and business logic (Cost Accounting vs. Managerial Accounting, 2012).
Cost accounting consists of forecasting the unit cost of products or services. Per unit cost computes expenses of running a line of production and calculates the materials that are consumed by resources. The different expenses that are computed involve production per every unit. Managerial accounting and cost accounting are internal accounting principles that are analytical (Cost Accounting vs. Managerial Accounting, 2012).
Managerial accounting involves financial transactions that are reported on a firms financial statement. Cost accounting is technically a part of managerial accounting. Cost accounting utilizes production costs to products sold to consumers. While managerial accounting must adhere to GAAP guidelines; cost accounting methods are determined by management. Managerial accounting accumulates financial data within a specific time frame. Cost accounting is an uninterrupted process that employs the cost of materials as the products or services are sold