Role of a Cost and Management Accountant
Cost and management accounting facilitates in planning, controlling and monitoring the price and cost of a service or product. The contemporary business world involves multi-product ventures. Therefore, it is essential to identify and understand the accurate cost of production of different services and products at various stages. This helps in minimizing the expenditure incurred on the products and ensures prudent use of financial resources. Here, the role of cost and management accountant comes into the picture.
Cost and management accounting can be utilized to fulfill a dual purpose. Firstly, it assists the management in taking optimal decisions. Secondly, an organization is capable of evaluating the performance to accomplish the targeted objectives.
Cost and management accountant evaluates the efficiency of production as well as service management and operational efficiency by collection, compilation, organization, verification and analysis of information from various departments of an organization. However, in large organizations the information is made available through the computer-based systems which are especially designed for systemization of work. Moreover, the process encompasses monitoring of related costs as well as overhead costs such as capital costs, labor costs and material costs which are involved in making of products or providing services.
A cost and management accountant conducts an analysis of sales trend for maintaining a balance between the forces of demand and supply. This also helps in preventing over production. Such professionals also monitor performance which helps in finding out and reporting problem. Therefore, the recurrence of the problems can be prevented. The analysis also helps in comparison of financial performances, provides the figures for future pricing and costing policies as well as other managerial decisions.
The professionals working in the field of finance utilize secondary data generated through accounting systems. The data are analyzed using sophisticated management accounting tools. This helps in presenting important information to the senior management at different levels. The basic work of a cost and management accountant is to determine the cost of services and products of an organization. These professionals help the company in responding to the changes in prices of services and products in an era characterized by cut-throat competition.
During the time of business slowdown, the capabilities of these professionals are tested. The organizations that posses a sound cost and management accounting system are expected to survive in the competitive market. Moreover, the management of organizations relies on these professionals for advisory services related to different areas such as project appraisal, capacity utilization, analyzing the probable alternatives along with their financial implications as well as capital restructuring decisions.