Management Accounting (Essay Sample)

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Management Accounting
Management accounting is crucial to organizations because it helps to streamline their budgeting. Through accounting for all costs incurred, companies remain competitive in markets. However, many organizations tend to focus on production costs and neglect marketing costs. Studies have shown that marketing costs account for half of total costs of products. Marketing involves physical delivery of goods and services to customers. Competition remains increasing at an alarming rate and organizations should increase customer services to retain them. Organizations are investing large amounts of cash in marketing to increase their customer base. Owing to the magnitude and relevance of marketing costs, organizations should not ignore them, but these costs should lead their analysis because they always measure profits corrects. Physical distribution of goods and services is paramount today in order to maintain customer loyalty in an organization; therefore, these costs should remain factored in financial analysis.
Organizations should apply activity-based costing strategy in analyzing profitability. This strategy helps people to establish profits according to product lines. If an organization has several branches, it will be able to establish which branch earned the highest profits. Many accountants find it hard to account for losses and profits. In most cases, they establish total profits made by the entire organization without considering what individual br...