Managers are necessary for organizations and perform many duties, including those related to the accounting. For example, they should actively participate in preparing responsibility accounting budgets since managers are responsible for achieving established budgets in their activities and setting goals (Tamplin, 2021b). At the same time, a crucial task is also reporting and analyzing within managerial accounting, which is aimed at assessing current operational metrics and providing detailed information for managerial decisions (Corporate Financial Institute [CFI], 2022a). As a result, managers are tasked with studying and analyzing complex data to resolve issues influencing organizations.
Accounting has a significant impact since its successful management is necessary for the viability of organizations. Doing business implies a particular cost, namely expenses, which can be direct and indirect (Tamplin, 2021a). The company’s indirect expenses are not related to only one purpose and the goods production as direct ones but benefit the organization in several aspects (Tamplin, 2021a).
There are different types of indirect expenses, which can be allocated on several bases. For example, an expense on the salary of a supervisor of several departments can be allocated considering the amount of work done. Rent costs and related utilities such as electricity, heat, and janitorial services will be issued based on the area occupied by departments. Property taxes on equipment and expired insurance on equipment can be determined based on the cost of the equipment used. Finally, indirect expenses on advertising can be identified following the performance of the departments in sales.
The organization’s financial information determines management decisions, which occur in several stages. They include defining the purpose, gathering information about different options for action plan, assessing expected consequences, making decisions, and evaluating their implications (Gray, n.d.). At the same time, several factors may affect managerial decision-making. For example, quality factors include customer satisfaction and expectations, employees’ attitude to work and commitment to the firm, product quality, and relationships with various stakeholders (Wild et al., 2019).
At the same time, some aspects that may seem significant do not affect the decision. For example, in decisions to sell products in the old form or updated, sunk costs do not matter since they have already occurred, and nothing can return them (CFI, 2022b). Thus, managers must face difficult decisions and consider many details in their work.
References
Corporate Financial Institute. (2022a). Managerial accounting. Web.
Corporate Financial Institute. (2022b). Sunk costs. Web.
Gray, K. D. (n.d.). 5 steps to good decision making. Corporate Wellness Magazine. Web.
Tamplin, T. (2021a). Direct and indirect expenses. Finance Strategies. Web.
Tamplin, T. (2021b). Responsibility accounting. Finance Strategies. Web.
Wild, J., Shaw, K., & Chiappetta, B. (2019). Financial and managerial accounting. McGraw Hill Education.