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Business Aspects of Management Accounting - Essay Example
Strategic Management Accounting (SMA) is basically refined Management Accounting, which overcame the short comings of prevalent management accounting ideas and techniques of 1980s. It consist of a range of various management accounting ideas which utilise the accounting database and knowledge in assisting the management in taking strategic decisions for the future rather than just number crunching exercise of historical figures to analyse the past performance.
Thus the strategic management accounting techniques developed to provide business solutions and assist the management in taking strategic decisions.
Cost management techques of SMA- ABC costing which focuses on the cost associated with activities which are the cause of indirect costs, their management so as to achieve competitive advantage, Life Cycle costing; This tries to trace the cost of a product from its inception, growth, maturity and delcline,thus give a broad long term view to the management from marketing perspective. Quality costing; the costs which arise due to quality control, quality failure prevention, quality achievement etc. These costs are considered essential these days as quality of a product sets the survival benchmark for any brand. Strategic Costing; the wholistic view of the band position and market pentration strategy is kept as the prime focus under this for competitive positioning and marketing. Target Costing; thorough analysis of how much profit can be supported by the market and refining the product design to ensure that the target profit is achieved. ...