After passing out from an MBA School people in business organizations faces several decision-making situations every day. In many cases, the accounting information that contains data has a direct effect on the decision making process in long term. By knowing how management accounting benefits MBA holders can benefit taking major decisions relevant to the context.
Analysis of Cost
The information obtained through accounting can be utilized by management to take decision about what should be sold and how it should be sold. MBA freshers may be unaware of areas where marketing efforts to be focused. For example the advertising costs vary for each product and each medium and ignoring common cost what decision could be made can be easily concluded. This same kind of decision making process also can be applied in the case of adding new production lines.
Costing based on Activities
Whom the products need to be sold should be determined prior to the making of what products to be sold. The activities involved in producing and servicing products can be planned with costing methods based on activities. And the cost the customers will be able to bear will be inside this activity cost. By knowing which type of customers are more profitable and which type of customers are less profitable the focusing area of business can be determined.
Make or Buy Decision
Managerial Accounting Information can be used into practice for areas in Manufacturing. Sometimes a decision has to be made whether to make a component or buy an existing one from the market for manufacturing an assembled product. By analyzing the economic factors one can conclude what decision needs to be taken to make the business more profitable.