How Management Accounting Is An Integral Part Of The Organization For Small And Medium Sized Companies ( Smes )

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Management accounting is a form of accounting that delivers accounting and other important information to a business, with the goal to support the internal decision making process. The processes of management accounting are an integral part of the internal organization of a business using the business’s systems to achieve the desired goals and deliver the desired results to the customers, shareholders and stakeholders. In short, “Management accounting provides information to help managers plan and control operations as they lead the business”. (Horngren and Harrison, 2007, pg. 901). The management accounting process consists of several steps and different processes, including but not limited to product costing, cost-volume analysis, and activity-based costing (ABC). This research paper focuses on activity-based costing and the advantages and disadvantages of implementing it at small and medium-sized companies (SMEs).

Activity-based costing (ABC) is a costing method that takes into consideration the cost incurred with a product and / or service based on the activities and processes that are required for manufacturing the product or offering the service. Activity-based costing has gained more and more importance, because it allows companies to more accurately determine the actual cost of a product or service. ABC not only takes into consideration the price of raw materials for products, but also the price of activities incurred
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