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    Management accounting provides information to aid in decision making, planning, controlling, evaluating, and continuous improvement. It summarizes the costs associated with making spare parts internally versus purchasing them from an outside supplier. While purchasing spare parts may seem cheaper initially, the full analysis is more complex and considers unavoidable fixed costs if internal production capacity remains idle. Management accounting functions include providing tools for decision making, relevant financial data, and measuring performance to coordinate company activities.

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    Management accounting provides information to aid in decision making, planning, controlling, evaluating, and continuous improvement. It summarizes the costs associated with making spare parts internally versus purchasing them from an outside supplier. While purchasing spare parts may seem cheaper initially, the full analysis is more complex and considers unavoidable fixed costs if internal production capacity remains idle. Management accounting functions include providing tools for decision making, relevant financial data, and measuring performance to coordinate company activities.

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    3 views6 pages

    Management Accounting Decision Analysis

    Uploaded by

    may
    Management accounting provides information to aid in decision making, planning, controlling, evaluating, and continuous improvement. It summarizes the costs associated with making spare parts internally versus purchasing them from an outside supplier. While purchasing spare parts may seem cheaper initially, the full analysis is more complex and considers unavoidable fixed costs if internal production capacity remains idle. Management accounting functions include providing tools for decision making, relevant financial data, and measuring performance to coordinate company activities.

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    of 6

    Management Accounting

    1st Meeting
    Assistant Class
    The 3 Objectives of Managerial Accounting
    1. To provide information for costing out services, products, and other
    objects of interest to management.
    2. To provide information for planning, controlling, evaluating, and
    continuous improvement.
    3. To provide information for decision making.
    The Implementation of Management Accounting
    • PT. ABC is faced with the problem of whether to make its own spare parts or buy from other
    suppliers. the need for spare parts is 100,000, while the production report that is calculated to
    produce the need for spare parts is as follows
    PT ABC
    Production Cost Repot
    Cost Desc Total Cost per Unit (Rp) Total of 100.000 Unit (Rp)

    Raw Material Cost 5 500.000

    Direct Labor Cost 10 1.000.000

    FOH Variable 3 300.000

    FOH Fixed 4 400.000

    FOH 5 500.000

    Production Cost Total 27 2.700.000


    • PT. ABC received an offer from another company to purchase spare parts of the same
    quality at a price of Rp. 25 per piece. Actions taken by the leadership of PT. ABC is
    instructing its management accounting staff to conduct an analysis of the offer. From
    the analysis carried out by the management accountant, the company's leadership can
    make a decision to buy these spare parts or continue to produce their own.

    • For example, in making this decision, the facilities to produce spare parts are considered
    to remain idle if the alternative of buying from outside is chosen. In relation to this
    problem, the cost information that needs to be considered is the unavoidable cost
    which is the relevant cost.

    • Although at first glance it is more profitable for PT. ABC to buy spare parts from outside,
    because the purchase price from other companies (Rp.25 per piece) is lower by Rp.2
    per piece when compared to making your own (Rp.27 per piece), but the basis of the
    analysis is not so simple
    Management Accounting Function
    • The following are the functions of Management Accounting for
    companies:

    1. Analysis Tool for Decision Making


    2. Information System for External Parties
    3. Sources of Relevant Financial Data and Information
    4. Sources of Information for Accountability of Each Level of Management
    5. Measuring and Monitoring Company Performance
    6. Coordination of Various Company Activities
    7. As Audit Archive
    Scope
    • After knowing the function of management accounting, the following
    will explain the scope of management accounting. This is the scope in
    question:

    1. Production Manager
    2. Finance Manager
    3. Marketing Manager
    4. Top Management
    5. Corporate Investors

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