Types of Managerial Accounting
1. Cost Accounting: Cost accounting looks at and keeps track of the money it takes to make things or provide services. To find the total cost of production, you have to keep track of both direct costs (like raw materials and direct labor) and secondary costs (like overhead). The study of costs helps you figure out how much things or services really cost. It helps with setting prices even more and finds ways to make things more cost-effective.
2. Activity-Based Costing (ABC): ABC is a type of cost accounting that puts indirect costs on certain tasks instead of products or departments. Finding the things that cause costs and connecting them to tasks helps ABC keep accurate records of how resources are used. It helps you make better choices about how to use resources and make processes better.
3. Budgeting and Forecasting: Setting financial goals for the company over a period of time is what budgeting is all about. Forecasting, on the other hand, guesses how money will do in the future by looking at past data and what the market is likely to do. Budgeting and making predictions are important for planning. They help you decide how to use your resources and set goals for success.
4. Standard Costing: Setting fixed prices for things like supplies and overhead is what standard costing is all about. In order to compare real costs, these standards are used as guides. Differences from normal costs can show you what needs your attention. It gives you the chance to make changes right away.
5. Variance Analysis: The real performance is compared with the planned or expected performance using variance analysis. Looking at the differences (variances) between the two helps figure out why there are deviations. You can figure out if they are caused by things you can control or by outside forces. Variance analysis is a powerful way to measure success and keep getting better.
6. Breakeven Analysis: The analysis tells you how many sales or items need to be made to cover your set and variable costs so that you make no profit or loss. To set prices and figure out how changes in costs or sales numbers will affect them, you need to know the breakeven point. It also helps figure out if new projects can be paid for.