Managerial Accounting

Managerial accounting involve with costs identifying, costs allocating, cost calculating, costs measuring, cost analysing and costs interpreting. There are many topics that we cover related to managerial accounting or costs accounting:

  • Activities Base Costing
  • Absorption Costing
  • Cost accounting
  • Close allocation
  • Variance Analysis

Is Owner Withdrawal a Debit or Credit? (Accounting for Owner Withdrawal)

Financial Reporting, Managerial Accounting

When individuals create a business venture, they introduce capital into it. This capital helps them grow and fund their operations. The business may either make a profit or a loss. Usually, once it goes through several accounting periods, it will accumulate some earnings. Some businesses use these earnings to invest in new operations. Others, however, […]

Is Owner Withdrawal a Debit or Credit? (Accounting for Owner Withdrawal) Read More »

What is a Managerial Report? Definition, Purpose, and Key Points to include

Managerial Accounting, Performance Management

Companies and businesses prepare various types of reports. These include both external and internal documents prepared for informed decision-making and other purposes. Of these, the most prevalent external reports include the financial statements. These statements provide meaningful information to both a company’s internal and external stakeholders. However, financial statements have a set format and do

What is a Managerial Report? Definition, Purpose, and Key Points to include Read More »

What Does ‘Management by Exception’ Mean? How Does It Work?

Managerial Accounting, Performance Management

Management is a very significant function in any business organization. All the departments of a business entity will collapse if there is no systematic managerial approach. Therefore, managers at different scales are very crucial to the success of every department and organizational success as a whole. Different management approaches and management styles are adopted across

What Does ‘Management by Exception’ Mean? How Does It Work? Read More »

Life Cycle Costing: Definition, Processes, Example

Managerial Accounting

A business incurs numerous costs over its life cycle. Different approaches are used in long-term planning for the business, profits, costs, and other departmental matters. A contemporary approach of life cycle cost is becoming more common for capital budgeting, price setting, engineering, design costs, etc. Unlike conventional costing, life cycle costing encompasses all the aspects

Life Cycle Costing: Definition, Processes, Example Read More »

LIFO Reserve: Definition, Formula Example, And How Does it Work

Managerial Accounting

LIFO Reserve The financial statements of any business are greatly affected by the choice of inventory valuation method. The balance sheet, income statement, cash flow statement, and other key financial ratios reflect the choice and impact stakeholders’ decisions. There are usually three inventory valuation methods. These methods are FIFO(First In, First Out) Inventory, LIFO(Last In,

LIFO Reserve: Definition, Formula Example, And How Does it Work Read More »

What is the Ordering Cost? Definition, Formula, Example, and How Does It Work?

Managerial Accounting

Definition The ordering costs are a combination of a bunch of costs bundled together. The ordering cost refers to the combination of administrative costs, inspection costs, and the cost of placing an order with the supplier. Basically, ordering costs are the expenses associated with creating and processing orders to a supplier. The ordering costs are

What is the Ordering Cost? Definition, Formula, Example, and How Does It Work? Read More »

Linear Programming in Management Accounting (Explained)

Managerial Accounting

Linear programming is a management/mathematical approach to find the best outcome, giving a set of limited resources. Thousands of businesses emerge every year, as more people aim to be business owners. Most of these businesses do not experience growth and eventually fold up due to failure in management accounting. How should businesses manage production challenges

Linear Programming in Management Accounting (Explained) Read More »

What is Limitation Factor Analysis? (Explained)

Managerial Accounting

Resources required for production can be quite scarce. Besides, one input level might be needed to produce different products at different output levels. Limiting factor analysis is the technique used to determine how to maximize your production output despite the various limitations confronting the production process. Every business aims to maximize profit; therefore, analyzing the

What is Limitation Factor Analysis? (Explained) Read More »