Article Summary & Analysis

Article Summary & Analysis
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Article Summary & Analysis
Several companies are faced with economic problems on how to properly allocate the few available resources to maximize profit. According to Freedman (2015), in his article titled, “Why Management Accounting Is Important in Decision-Making,” small businesses owners are the ones affected most because they are forced to make countless decisions every day. The author states that the solution to their problem is managerial accounting information. Managerial accounting information provides data-driven in that makes decision-making a smooth process (Freedman, 2015).
Managerial accounting information acts as a tool that is considered powerful, in my view, because it can make a difference in how small business owners make decisions to become more successful. It helps in understanding managed accounting. Freedman (2015) states that managerial accounting information is imperative because it is used by a company management to determine several issues at hand. One of the important decisions is to either sell or how to sell the products. Freedman (2015) gives an example of a situation when a small business owner is not satisfied with his marketing effort. Such decisions can be made by evaluating the costs of different advertising alternatives for its products this is known as relevant cost analysis. This is the same process that can be used to determine other issues while making significant decisions in business (Freedman, 2015).
Managerial accounting is important because it also helps a company determine what products to sell by using an activity –based costing technique. This process helps identify the activities that are involved in the process of production this includes the cost of customers. This means deciding the type of customers and focuses its advertising towards its target groups to make more profit. Managerial accounting provides information, especially during the manufacturing process. For example, a business may decide to purchase certain components needed to produce his primary product. This can be done by conducting a buy analysis to determine if the decision is going to be more profitable (Diaconu, 2006).
Managerial accounting provides data on how the business is growing through budgets, financial statements projections and balanced score cards among the few examples .Such information can be used to help management guide the future of the company. Such information helps managers make the decision that generates improvement and can be justified based on the available data (Diaconu, 2006).
Managerial accounting information are used everywhere, in institution including the New York stock exchange and banks. These financial institutions have sophisticated markets therefore they need managerial accounting information to channel the resource profitably. Banks uses credit and lending decision to allocate it resources. However, they also rely ...