Q. What is Managerial accounting information?
A Managerial accounting information is for internal use and provides special information for the managers of a company. The information managers' utilizes may range from broad long-range planning data to detailed explanations of why actual costs varied from cost estimates. Managerial accounting information must:
• Relate to the division of the company for which the manager is responsible. For instance a production manager wants information on costs of production but not of advertising.
• Engage planning for the future. For example a budget would show financial plans for the coming year.
• Assemble two tests: the accounting information should be useful (relevant) and must not cost more to gather and process than it is worth. A Managerial accounting generates information that managers are able to use to make sound decisions. The four main types of internal management decisions are:
• Financial decisions-make a decision what amounts of capital (funds) are needed to run the business and whether to secure these funds from owners (stockholders) or creditors. In this wisdom capital means money used by the company to purchase resources such as machinery and buildings and to pay expenses of conducting the business.
• Resource allocation decisions-deciding how the entire capital of a company is to be invested such like the amount to be invested in machinery.
• Production decisions-settle on what products are to be produced by what means and when.
• Marketing decisions-set selling prices and advertising budgets that determining the location of a company's markets and how to reach them.