Management Accounting : Planning And Performance Management Systems

1625 Words Oct 7th, 2014 7 Pages
Management accounting is described as “a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organisations strategy” (Blocher, et al., 2009). Many Changes in the business environment have occurred in recent years which have caused substantial adjustments in cost management practices leading to a contemporary business environment. These changes in the business environment have caused management accountants to respond by implementing and innovating specific management techniques to better implement strategy in these dynamic times. Also in looking at these techniques, we discover how management accountants shape and create a reality of organisations performances.

Prior to the 1950s most businesses were more focused on cost determination (Prakash, 2013), which was associated with stock valuation and the allocation of overheads. Some of the management accounting techniques that were developed for cost estimation were Last In First Out (LIFO) and First In First Out (FIFO). These management accounting techniques were quite simple with LIFO being products that make their way to inventory later are sold first and those manufactured earlier are sold last. FIFO is the opposite where products manufactured earlier are sold first and those manufactured later are sold last. By 1965, companies had…
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