Management accounting refers to a function of tracking internal cost for any business process that helps an organisation, firm or an individual in making decisions related to production, operation and investment in market.The role of the management accountant includes collecting, recording and reporting financial data from several units of an organisation, observing and analysing their budget and suggesting their funding and allocation. This includes estimation of the cost of raw material, labour, manufacturing, sales, advertising and the company's internal operation costs. (CIMA, 2015).
For cost control and performance measurement, costs and revenues must be traced to the individuals who are responsible for incurring them. This system is known as responsibility accounting. Responsibility accounting involves the creation of a responsibility centre Drury, 2015).
You are required to write a report on the role of management accounting, either as a function, or in the context of the person â€“ the management accountant. Your report must address the following:
a) Discuss the role of management accounting in an organisation (make comparisons to financial accounting).
b) Discuss the classification of costs by function (production, non-production); by type (direct, indirect); by behaviour (fixed, variable, stepped fixed) and relevance. Provide examples and diagrams where necessary.
c) Discuss the FIFO (First In First Out) and LIFO (Last In First Out) methods of inventory valuation making comparisons between them.
d) Discuss the concept responsibility accounting. Your discussion must include responsibility centres cost, revenue, profit and investment centres.