The Role Of Management Accounting

Accounting is the language of economic information. Users of accounting can get economic information appropriate and effective. In this essay, there are some discussions about roles of financial and management account, then this essay will talk about relevance management accounting information for organization decision making.

There are two branches of accounting, one branch is financial accounting and the other one is management accounting. All of them are useful to help users to make decision, but they have different roles.
Collier (2012, p.7) state that “Financial accounting is the recording of financial transactions, aimed principally at reporting performance to those outside the organization, with a primary focus on shareholders.” There

Weetman (2013) stated that there are three roles of management accounting for decision-making: directing attention, keeping the score and solving problems. Directing attention means that management accounting should provide relevance information to directing managers’ attention, and then managers can force on theses useful information. Attention-directing processes make data fairness and timeliness. Score keeping is the process to answer the questions ‘how much’ or ‘how many’. Solving problems is the final process to make decision; this process shows explicit results. Making decision will be reliable and efficient when it based on management accounting. And management accounting is different of financial accounting; there is no legal obligation of management accounting and the main users are managers within company. So there is no stander format or stander rules for management accounting. Each company can freely choose how to use management accounting, company can decides rang report on partial enterprise, frequency and format of management accounting. So management accounting information should have some characteristics: accuracy, timely, global, trusted, practicality, holistic, flexible, contextual and

First method is called cost-plus pricing; company should know full cost of product then plus mark-up. Cost-plus pricing apply to price customized products/services. Cost-plus pricing also apply to price non-customized products, but there is a risk. Company cannot know the demand of non-customized products, company use the approximations of demand to price products. If the real demand does not coincide with approximation, the result of cost-plus pricing is unreliable. So the limitation of cost-plus pricing is that the technique ignores demand. There is a limitation of cost-plus pricing, but the technique is very useful. Drury (2012) claimed that the cost-plus pricing may encourage price stability, because company can forecast the price of other companies by this way. And this method is simple; this method can be widely