What is Managerial Accounting?

Managers Need Actionable Information

Anybody really know what our product costs us to make?

There are two major ways to increase net income or profit:

· Increase revenues

· Reduce costs

Rarely can you increase revenues without also increasing costs to support the increased revenues. If costs increase at a faster rate than revenues increase, due to inefficiencies, then increasing revenues is counterproductive. Or in the second case, if a reduction in costs, say marketing of advertising, has an unintended negative impact on revenues, then that cost reduction strategy is also counterproductive. These scenarios illustrate the fundamental importance of really having a good handle on all the aspects of costs and the dynamics of how they vary.

Understanding cost structure and determining costs of producing goods or delivering services can get complicated. Complexity increases as the number of…