Formerly called analytical accounting, the term management accounting refers to the calculations made to inform the heads of organizations. A powerful analytical approach, it makes it possible to measure the profitability of products or services and to make informed management decisions.

Determine the performance of a product, service or function

Unlike general accounting, the keeping of management accounting is not compulsory from a legal point of view, but constitutes an essential tool for knowing its costs and analyzing its profitability. Management accounting makes it possible to know each element that makes up the cost of a product, service or function. She distinguishes:

• direct costs that are directly allocated to the production of a service or good, for example the raw material attributable to a given product
• indirect costs involved in the production of several goods or products, including the intervention of a technician assigned to the production of several products
• fixed costs that do not change regardless of the level of activity of the company, for example the rent of business premises
• variable costs that fluctuate with production volume, such as shipping costs for orders

Thanks to analytical accounting, we can know exactly the cost price of a product, a service or a function and determine its profitability, while distinguishing the performing elements and detecting the faults in the process which encroach on margin.

Guiding the company's product policy

If the management accounting allows to analyze the production costs of the products and services of a company and to compare them with the selling prices in order to determine the cleared margin, it does not constitute an end in itself. It is indeed a reliable method of analysis contributing to distinguish precisely the products which are profitable from those which are not, to set up corrective actions aiming at improving the performances and the profitability of the organization. Management accounting makes it possible to make decisions concerning the range of products and in particular:

• to decide to manufacture a seasonal product for only part of the year, the management accounts showing that the storage of unsold products is expensive and eats into the margin
• to increase commercial actions to increase sales of a product offering excellent profitability
• to launch a new product in a range that works well
• modify or discontinue a product that is not profitable

Determine a strategy for the company

Much more than a method of cost analysis, management accounting is a real strategic tool and budget control that helps the manager to manage his organization. Drawing its sources from general financial accounting, it presents a detailed vision of the activity enabling decision-makers to:

• to establish precise provisional income statements
• to compare the results with the forecasts
• to control budgets
• to understand the differences
• to take any corrective measures

Little used in companies on a human scale, it is nevertheless just as useful as in larger structures.

There is no shortage of management accounting methods: but whichever method is used, whether it is the full cost method, partial cost method, direct costing, the ABC method or even target costs, it is essential for any organization to acquire this management and decision support tool, to enable decision makers to make informed decisions.

What is the main benefit of Strata administration

The main benefit of strata administration is that it helps to ensure the effective and efficient management of multi-unit property complexes, including apartments, condominiums, and townhouses. By managing the administrative functions of a property complex, strata administration helps to ensure that the property is well-maintained, properly funded, and in compliance with all relevant regulations and bylaws. This helps to protect the long-term value and viability of the property, which is important for owners and investors. Additionally, effective strata administration helps to improve communication and collaboration between owners and tenants, which can lead to a more harmonious and productive living or working environment. This, in turn, can lead to increased tenant satisfaction, lower vacancy rates, and increased property values, all of which are critical for the long-term success and profitability of the property complex. Ultimately, the main benefit of strata administration is that it helps to ensure the smooth operation of multi-unit property complexes, which are important assets for property owners and investors.

Managing your employee benefits: why hire an accountant?

Strata Accounting Consultants in Melbourne