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The Managerial Accounting process in General Electric Inc - Term Paper Example

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The Managerial Accounting process in General Electric Inc

Managerial accounting process provides financial as well as non-financial information to the managers and other internal decision makers of an organization. In other words, it ensures effective planning and controlling of operations thereby supporting the decision making process. Planning of operations primarily involves the budgeting process. It is associated with the cost of producing a unit of product. Thereafter, the actual performance of the firm is compared along with the budgeted amounts and controlling occurs in those sectors where the difference seems to be significant (CSN, 2011). Simultaneously, along with the development of managerial accounting principles the traditional accounting system also witnessed a rapid development. However, there are good numbers of firms which are still following the traditional accounting system. But with the increasing global competition and evolution of technologies, production oriented operations are becoming more and more complex. Firms need to do an effective evaluation of the cost that they incur for producing goods, so that proper pricing of those goods can be done, which will generate sufficient revenues for the company. Precise cost information is very crucial for every aspect of business, be it pricing policies, product designs or performance reviews. These requirements saw the inception of activity based accounting over two decades ago and now is widely used in US, Europe and Pacific. Similar to managerial accounting, activity based costing not only includes the evaluation of a company from financial perspective, but also from the wholesome perspective as it includes both financial and non-financial data in its reporting (Gupta & Galloway, 2003). The following section will involve a thorough analysis of the managerial accounting process followed in General electric Inc thereby explaining the significance of Activity based costing towards the financial performance of the company. Moreover, comments will be made as to whether the usage of activity based costing system will add to the benefits of the company or not. Thereafter, emphasis will be laid on the usage of standard costing by General Electric (GE). Standard costing is basically used by companies for comparing standard cost set by the company with the actual cost that is incurred. Hence it draws attention to performance of the company with respect to the goal that is set by the company. The project seeks to find the benefits that are obtained from using the standard costing system as the part of the costing system if GE employs it. The fifth part of the project enlightens the benefits of the relevant cost for the future projects of the company. It helps the management of the company to take any crucial decision regarding the acceptance of the project or take make or buy decision. The data required for the purpose of analysis will be retrieved from the company website as well as from yahoo finance. In addition to that journal articles related to the topic of discussion will be used as the basis of ground work for the purpose of evaluation. Section II General Electric General Electric Company, ...Show more

Summary

The managerial accounting process in general electric inc. Name of the Student: Name of the University: Date: Table of Contents Section I 3 Section II 4 General Electric 4 Section III 7 Activity based costing 7 Section IV 9 Standard Cost 9 Standard Costing 9 Establishments of Standard cost 10 Benefits of Standard Costing in General Electric 11 Section V 13 Benefits of Relevant cost 13 Section VI 14 Conclusion 14 Section I Managerial accounting practices have undergone a drastic change over the last few decades…
Author : kennethkunze
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